The eurozone economy has shown signs of robust growth, reaching a 12-month high as the Eurozone Composite PMI Output Index climbed to 52.2 in May, according to data released on Wednesday. This upturn is attributed to a significant cooling of inflation rates, which, despite remaining above pre-pandemic averages, have eased from previous highs. Germany and Spain led the charge with impressive economic performances, with Germany's output volumes surging at the fastest rate in a year and Spain's growth quickening to a 14-month high. Conversely, Italy's expansion slowed, marking a slower pace of growth. New business inflows across the eurozone increased at the quickest rate since April 2023, driven by stronger demand conditions, particularly in the services sector. Business confidence also soared to a 27-month high, reflecting growing optimism about future economic activity. Employment growth remained steady, matching the rapid pace set in April, which was the joint-fastest since June 2023. The services sector was a key contributor to job creation, while manufacturing saw a slight contraction in workforce numbers. Overall, the eurozone's economic outlook appears positive, with the Composite PMI and GDP Nowcast indicating potential growth in the second quarter, bolstered by a resilient service sector and improving domestic markets.
