Stronger demand conditions supported greater output and hiring, while business confidence also improved for the seventh time in the past eight months.

As for trends in prices, the latest survey results showed input cost and output charge inflation rates cooling, but still running above their respective pre-pandemic averages, an S&P Global release said.

The seasonally-adjusted HCOB eurozone composite PMI output index—a weighted average of the HCOB manufacturing PMI output index and the HCOB services PMI business activity index—increased in May, as has also been the case throughout this year so far, to a one-year high of 52.2, from 51.7 in April.

Overall, this indicated the strongest increase in euro area economic activity since May 2023, and one that was only narrowly softer than seen on average since data were first available in 1998.

Of the top-four eurozone economies, France was the outlier in May as a marginal and renewed contraction in private sector activity contrasted with growth in Germany, Spain and Italy.

Spain’s position as the top performer was solidified as economic growth here was sharp, quickening to a 14-month high.

The bloc’s largest economy, Germany, also registered a marked upturn, with output volumes rising at the fastest pace for a year.

On the other hand, Italy’s expansion lost momentum, cooling to its weakest since February.

Stronger demand conditions were a key reason behind May’s upturn in business output across the euro area.

Total new order intakes rose for a second month in succession and at the quickest rate since April 2023. The downturn in factory orders cooled markedly from the previous month.

The latest survey data suggested that improved sales performances were restricted to domestic markets, as new business received from abroad declined in line with the trend since March 2022.

Confidence in the year-ahead outlook for business activity strengthened further in May after April’s fractional setback. Overall, growth expectations have improved in seven of the last eight months.

The level of positive sentiment was at its highest since February 2022 and well above its long-term average.

Eurozone companies raised employment for a fifth consecutive month. The rate of job creation matched that seen in April and was, therefore, the joint-fastest since June 2023.

Meanwhile, prices gauges signalled cooling inflationary pressures across the eurozone midway through the second quarter this year.

However, the increase in input costs remained sharp and well above its pre-pandemic average. It was a similar picture for output prices: the rate of inflation in selling charges eased to a six-month low, but remained considerably steeper than that seen on average prior to 2020.

Fibre2Fashion News Desk (DS)