Key facts
- Euro zone manufacturing PMI decreased to 51.6 in May.
- Euro zone input costs reached a four-year high in May.
- Euro zone firms increased prices charged at the fastest rate in three-and-a-half years.
- U.S. manufacturing sector ISM PMI surged in May.
- Indonesia's manufacturing sector PMI reached 50.0 in May.
- France's services sector activity and new business fell at the steepest rates in five-and-a-half years in May.
- Global merchandise trade Goods Trade Barometer index fell to 101.7.
- France's budget deficit reached €69.6 billion by end-April.
- Eurozone construction activity contracted in May.
- France's budget deficit widened from the previous period's €42.9 billion.
Global manufacturing and trade present a mixed picture, with the Eurozone experiencing a slowdown while the U.S. sector shows resilience. In the Eurozone, factory growth eased in May, as indicated by a manufacturing PMI decrease to 51.6 from April's 51.4. This slowdown is accompanied by input costs reaching a four-year high and firms increasing prices charged at the fastest rate in three-and-a-half years, posing challenges for the European Central Bank's inflation control efforts. Eurozone construction activity also contracted in May, primarily due to persistent supply issues, hindering the sector's recovery.
In contrast, the U.S. manufacturing sector demonstrated resilience, with its ISM PMI surging, signaling a significant improvement in factory health. Indonesia's manufacturing sector stabilized, with its PMI reaching 50.0 in May. However, France's economic landscape shows significant contraction in its services sector, which shrank at the steepest rate in five-and-a-half years due to falling activity and new business. Rising inflationary pressures and geopolitical uncertainty contribute to weakening business sentiment in France, raising recession concerns.
Globally, merchandise trade growth may be slowing, according to the World Trade Organization (WTO), whose Goods Trade Barometer index fell to 101.7. Despite disruptions from the Middle East conflict, trade has shown resilience, partly supported by demand for AI-related electronic components. The index remains above the 100 baseline, indicating that trade volume is still above trend. Adding to economic concerns, France's budget deficit reached €69.6 billion by the end of April, a slight increase from the previous year's €69.3 billion for the same period, and a widening from the prior period's €42.9 billion.
The persistent supply issues impacting Eurozone construction and broader inflationary pressures in the Eurozone and France suggest ongoing challenges for economic stability and growth in these regions. The resilience of U.S. manufacturing and specific demand drivers like AI components offer counterpoints to the global slowdown narrative.