FX.co ★ Eurozone manufacturing activity contracts

The eurozone is going through a really tough time. The region’s economy cannot get enough support to reach a good pace of growth. Indicators show little changes, partly positive, but mostly negative. A new bunch of important economic reports was disappointing. The eurozone manufacturing sector continued to contract in May for a fourth successive month. Analysts see no reason for the growth in the short term. However, there are plenty of reasons for the further decline. The trade war between the US and China, falling demand for cars, prolonged Brexit, and geopolitical uncertainty affect the activity growth in the manufacturing sector.

The IHS Markit Eurozone Manufacturing PMI reached 47.7 in May. That was slightly down from the previous month’s 47.9. The index measuring output change also held below the 50-point mark separating growth from contraction coming in at 48.9. Such statistics should be of concern to policymakers at the European Central Bank. The regulator will probably expand stimulus. This is why there is little likelihood of it raising interest rates in the near future.