Eurozone PMI at 12-month high, indicating economic acceleration, potential interest rate cut

From Morningstar: 2024-05-23 07:38:00

Eurozone Flash PMI estimates for May indicate economic acceleration. The HCOB Flash Eurozone Composite PMI Output Index rose to 52.3 from 51.7 in April, higher than FactSet consensus. Business activity, new orders, and employment all increased significantly. Service sector was key contributor, while manufacturing saw slight improvement but remains below expansion line.

Eurozone wage data released by ECB signals potential interest rate cut on June 6. Inflation rates for input and output prices softened, with service sector contributing most to inflation. ECB likely to cut rates, despite marginal improvement in inflation outlook. ECB President Lagarde confident in controlling inflation, with other policymakers signaling support for rate cuts.

Eurozone’s wage acceleration poses challenges for ECB’s future decisions. German wage data reveals highest increase in nearly a decade. Eurozone saw wage growth of 4.7% in the first quarter. This could slow down pace of rate cuts, as wage pressures are crucial for ECB officials in shaping future policy decisions.



Read more at Morningstar: Eurozone PMIs at 12-Month High