The drop in eurozone manufacturing output worsened in May as demand slumps despite factories lowering prices for the first time since September 2020, according to a survey on Thursday.
The official HCOB manufacturing Purchasing Managers’ Index (PMI) for May, compiled by S&P Global on Thursday, dipped to 44.8 from April’s 45.8, beating a preliminary reading of 44.6 but still below the 50 threshold separating growth from contraction for the eleventh month in a row.
“The weakness in demand in the manufacturing sector, which has become increasingly evident since the beginning of the year in falling PMI readings, has now led the surveyed companies to reduce their production for the second month in a row,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The decline in new orders from home and abroad signals that the weakness in output is likely to persist for several more months.”
Despite factories being able to lower prices as a result of production costs falling at the quickest rate since February 2016, demand nevertheless fell. In May, the output price index dropped to 49.0 from April’s 51.6.