Eurozone May final manufacturing PMI 39.4 vs 39.5 prelim

Latest data released by Markit – 1 June 2020

  • Prior 33.4
The preliminary release can be found here. Little change relative to the initial estimate and this just reaffirms that while factory conditions have improved since April, they are still relatively subdued considering the economic fallout from the virus outbreak.
Looking ahead, the devil will be in the details when it comes to PMI readings. Headline figures should continue to see an improvement based on the survey question of “how is your business activity doing relative to the month before?”.
But for the manufacturing index, sub-indices such as new orders, output, and employment will be the key things to focus on moving forward.
Markit notes that:

“The manufacturing downturn looks to have bottomed-out in April, with production falling at a markedly slower rate in May. The improvement in part merely reflects the comparison against a shockingly steep fall in April, but more encouragingly was also linked to companies restarting work as virus lockdowns were eased. The further lifting of COVID-19 restrictions in coming months should provide a further boost to manufacturers.

“While we are still set to see unprecedented falls in industrial production and GDP in the second quarter, the survey brings hope that the goodsproducing sector may at least see some stabilisation – and even potentially a return to growth – in the third quarter.

“Whether growth can achieve any serious momentum remains highly uncertain, however, as demand – both domestically and in export markets – looks set to remain subdued by social distancing measures, high unemployment and falling corporate profits for some time to come.

“Headcounts continue to be cut at a rate not seen since the height of the global financial crisis in 2009 as firms scale-back capacity in line with weak demand. Prices charged for goods are meanwhile also still falling at a pace not exceeded over the past decade as manufacturers offer discounts to help clear warehouses of unsold stock. The labour market and profits could therefore deteriorate further in coming months, holding any recovery in check.