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Edward Bell - Senior Director, Market Economics
Published Date: 24 May 2023
Germany’s economy showed further signs of resilience in May, according to preliminary PMI readings. The composite PMI number for Germany rose to 54.3, marginally higher than the 54.2 recorded a month earlier but beating market expectations for a slowdown. The gain was wholly down to an improvement in the services component where the PMI rose to 57.8, its strongest level since August 2021, and better than market expectations for 55. Manufacturing, however, remained weak with the PMI for the sector weakening to 42.9, representing 11 months in a row of contracting activity. Price pressures were higher in the services sector, reflecting overall healthy consumer demand. The composite PMI for France slipped to 51.4 from 52.4 a month earlier as the services sector showed signs of slowing down. The Eurozone-wide composite PMI ticked lower to 53.3, from 54.1 a month earlier, with both the manufacturing and services components declining.
The UK PMI for May dipped to 53.9 for the composite print, lower than the market expectation for 54.6. The services PMI fell to 55.1 from 55.9 a month earlier but still comfortably on the expansion side of the indicator. New business measured by the index also slowed, to 55.4 from more than 56 in April. Similar to conditions in the Eurozone, the manufacturing sector remained soft at 46.9 and representing 10 months in a row of contraction.
In the US, the services PMI for May rose to 55.1 from 53.6 a month earlier, suggesting consumption in the economy is still performing well despite pressures from inflation and high interest rates. The services outperformance helped to push the composite level higher, to 54.5 from 53.4, as manufacturing dipped to below 50, falling to 48.5 for the month. Business expectations also rose to one-year high while the shift in inflation from goods to services remains a worry. The PMI numbers provider another clue that the US may indeed avoid recession in 2023.
The UAE and Malaysia will start talks about forming an economic partnership, according to a statement from Malaysia’s trade minister. Bilateral trade between the two countries is estimated at USD 8.5bn for 2022.
Today’s Economic Data and Events
Eurozone inflation expectations fall sharply
US ISM services index disappoints with near-stagnant growth
US nonfarm payrolls rise by 339K in May
Eurozone inflation slows further in May
The GCC and the energy transition
Adjusted Taylor rule suggests limited further upside risk for the Fed Funds rate