Europe's private sector expands slightly in May, defying tariffs
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The news: The euro area private sector expanded slightly in May, showing its resilience in the face of US tariff uncertainty.
The numbers: S&P Global’s Composite Purchasing Managers’ Index (PMI), fell to 50.2 in May from 50.4 in April. An initial reading had come in at 49.5.
While the sector grew, it remained only just above the 50 threshold which separates growth from contraction.
The context: S&P said that business activity was restrained by continued weakness in demand for goods and services, limiting employment gains and pushing firms to continue running down backlogs of work.
Manufacturing was the eurozone’s primary engine for growth as services activity decreased in May for the first time since last November. The deterioration in demand for services was the most pronounced in six months with a sharper drop in international orders partly to blame, as export sales fell at the fastest pace since November last year.
What they said: Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “For the rest of the year, we are confident that further key interest rate cuts by the European Central Bank and fiscal stimulus, particularly from Germany, will be sufficient to offset the negative effects of higher tariffs and increased uncertainty.”
The source: S&P Global
