EU factory growth held back by Germany, France

Factory growth in Europe failed to match initial estimates in May, according to today’s data. The survey from Markit showed that the core economies of Germany and France were dragging on the rest of the European Union (EU).

The data showed that prices stayed at the same level in May, which shows that inflation remains an issue and will disappoint the European Central Bank.

The final May manufacturing purchasing manager’s index (PMI) for the euro zone was 52.2, just under the flash estimate and up from April’s 52.0. A reading above 50 indicates growth in the sector. However, analysts were unimpressed by the 23rd consecutive month of expansion.

Markit’s chief economist, Chris Williamson, said that the rate of growth was “modest rather than spectacular”, and noted that weakness was centered in the region’s core.

France’s manufacturing activity remains in decline, while Germany is only seeing meagre growth of 51.1. However, the report showed strong recoveries in Spain and Italy, who saw impressive export performance.

Mr Williamson noted that “manufacturers in France and Germany need to be mindful of such competition”.