The IHS Markit Flash Eurozone Manufacturing PMI inched up from 56.7 in April to 57.0 in May, its fastest pace since April 2011. This suggests that manufacturers in Europe have mostly brushed off political uncertainties, with economic growth on the continent continuing to trend in the right direction. The underlying data were encouraging, including new orders (unchanged at 57.7), output (up from 57.9 to 58.4), exports (up from 57.4 to 57.6) and employment (up from 55.5 to 56.2). Activity in Germany (up from 58.2 to 59.4) mirrored the larger Eurozone headline number, with its manufacturing PMI figure also rising to a 73-month high. At the same time, French manufacturers (down from 55.1 to 54.0) cited modest expansions in activity in May, even as it pulled back from April’s six-year high. The larger story for France, though, is that its manufacturing sector has expanded for eight straight months – a sign that its growth is beginning to turn around.
Meanwhile, the IHS Markit Flash U.S. Manufacturing PMI eased to its slowest growth rate since September, down from 52.8 in April to 52.5 in May. It was the fourth consecutive monthly decline, down from 55.0 in January, which was the fastest growth rate in nearly two years. Nonetheless, we continue to see modest growth overall in sector nationally, even with decelerated accelerations across-the-board. This includes new orders (down from 53.7 to 53.4), output (down from 53.4 to 53.3), exports (down from 52.1 to 51.3) and hiring (down from 52.5 to 51.9). Looking ahead 12 months, manufacturers in the U.S. continued to be optimistic about future output (up from 65.9 to 66.5).