The eurozone’s manufacturing sector showed further signs of recovery in May, edging closer to stabilization, according to the latest survey data. The HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 49.4 in May from 49.0 in April, reaching its highest level in nearly three years. Although still below the neutral 50.0 mark that separates growth from contraction, the steady improvement signals a gradual rebound.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted, “The continued upward movement in the PMI suggests that the recovery is gaining traction.” Manufacturing output expanded for the third consecutive month, with the output index holding firm at 51.5—matching its highest reading since March 2022. New orders showed signs of stabilizing after nearly two years of decline, while export demand hit a 38-month high. Employment in the sector declined at the slowest pace since September 2023, and purchasing activity contracted at its mildest rate in almost three years, indicating improving business sentiment.
Among individual eurozone economies, Greece led the pack with a PMI of 53.2, unchanged from April. Spain returned to growth territory with a reading of 50.5, while France edged closer to stabilization at 49.8, its best performance in over two years. Germany, although still lagging with a PMI of 48.3, experienced one of its softest downturns in recent years.
“Production is rising across all four major eurozone economies, underscoring the broad-based nature of the recovery,” de la Rubia added.
Looking ahead, manufacturers expressed the highest level of optimism since February 2022, despite concerns over potential U.S. tariffs on European goods. The future output index jumped to 61.6 from 58.0. Input costs continued to fall for the second month in a row, with the pace of decline accelerating to a 14-month high. In response, manufacturers reduced their selling prices for the first time since February, potentially easing inflationary pressures.