Euro zone factory growth remained tepid in May - PMI

By Jonathan and Cable

LONDON, June 1 (Reuters) - Euro zone manufacturing activity growth remained lacklustre last month, a survey showed on Wednesday, supporting the view that strong economic growth in the first quarter did not carry through to the second.

Markit's final manufacturing Purchasing Managers' Index (PMI) for the euro zone dipped to a three-month low of 51.5 from

April's 51.7, unchanged from an earlier flash reading.

"Manufacturing in the euro area remained stuck in a state of near-stagnation in May, failing to break out of the slow growth phase that has plagued producers since February," said Chris

Williamson, chief economist at survey compiler Markit.

"The disappointing performance of manufacturing adds to suspicions that the pace of euro zone economic growth in the

second quarter has cooled after a surprisingly brisk start to the year based on the latest estimate of GDP."

Gross domestic product grew 0.5 percent in the first

quarter, figures showed last month, and is expected to expand just 0.3 percent this quarter, according to a May Reuters poll.

In the Markit survey a subindex measuring manufacturing output, which feeds into Friday's composite PMI, confirmed the

preliminary estimate of a fall from April's 52.6 to 52.4. A reading above 50 indicates growth.

The slowdown came despite factories cutting their prices again. An index measuring output prices rose to 48.8 from 47.4,

holding below the 50 mark for a ninth month.

Inflation across the currency union was -0.1 percent last month, official data on Tuesday showed, nowhere near the

European Central Bank's 2 percent target ceiling.

But as the ECB fired another salvo in its battle to drive up growth and inflation earlier this year, introducing sweeping new easing measures, no action is expected when it meets on Thursday. [ECB/INT]

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Morning Bid: Could consumers keep the Fed on hold, while Japan hikes?
• American actress Hayden Panettiere dies at 36, ABC News reports
• Japan's economy expands annualised 1.1% in April-June