Eurozone economic activity continues to surge, according to a benchmark private sector survey, as growth rates in the core of the currency area accelerate to their fastest rates in more than six years.
IHS Markit Economics' Composite PMI reading of Eurozone growth rose to 56.8 in May, up from 56.7 in the previous month and the highest tally since 2011. Readings above 50 generally indicated economic growth. Markit's measure of manufacturing activity rose to 57.0, a 73-month high (up from 57.9 in April) while the pace of activity in the services sector slipped modestly to 56.2 from a previous reading of 56.4.
"The PMI data indicate that eurozone growth remained impressively strong in May," said IHS Markit's chief economist Chris Williamson. "Business activity is expanding at its fastest rate for six years so far in the second quarter, consistent with 0.6- 0.7% GDP growth. The consensus forecast of 0.4% second quarter growth could well prove overly pessimistic if the PMI holds its elevated level in June."
The European single currency extended gains against the U.S. dollar following the release, rising to 1.1249, the highest level since November's Presidential elections.
Markit's composite indicator for Germany, the region's largest economy, showed manufacturing growth surged to a 73-month high of 59.4, a reading that more than offset a 2-month low of 55.2 for the country's services sector.
"Manufacturing continued its impressive performance with output, new orders and backlogs all growing at the sharpest rates in over six years, and export expansion hitting a seven-year record," said senior economist Trevor Balchin. "Cost pressures at manufacturers also eased noticeably in May, but remained strong overall."
"The only blot on Germany's copybook in May was a further solid but unspectacular rise in service sector new business, reflected in another decline in the volume of outstanding work in the sector," he added.