Despite service sector resilience, there was an overall loss of momentum within the sector in May, leading private sector business output to rise at the slowest pace since January amid fading post-pandemic catch-up effects, growing uncertainty and rapid inflation, S&P Global said in a press release.

Nevertheless, combined new business intakes across manufacturing and services firms continued to grow in May, while there was further evidence of squeezed capacities as backlogs of work rose once again.

The seasonally adjusted S&P Global eurozone purchasing managers’ index composite output index fell to a four-month low of 54.8 in May, down from 55.8 in April.

While the headline measure was still indicative of economic growth across the euro area, it also highlighted a loss of momentum. This slowdown was exclusively a result of a softer service sector expansion amid signs that the post-lockdown rebound was losing some strength.

Nevertheless, services activity continued to rise at a robust pace and masked clear weakness within the goods-producing sector. Although manufacturing output growth edged slightly higher from April’s 22-month low, it was subdued and below its long-run average.

Of the monitored euro area constituents, Ireland was the fastest-growing economy in May. That said, the expansion there slowed to a four-month low. Slowdowns were more or less broad at a country level during the latest survey period, with Spain the only exception as the rate of growth here was unchanged since April.

At the other end of the spectrum, Italy was the worst performer and recorded a modest expansion in private sector output. Latest survey data pointed to a further increase in new business receipts across the euro area private sector in May.

Fibre2Fashion News Desk (DS)