Manufacturing activity in May declined at one of the steepest rates seen in the last three years. At 44.8, the final sector PMI was 0.2 points above its flash estimate but still a full point short of its final April mark and more than 5 points below the 50-expansion threshold.

Production fell at the fastest rate since last November as new orders declined by the most in half a year. Output would have decreased more sharply but for backlogs which were pared at a faster pace than in April. Employment still rose but matched the smallest rise during the current 28-months of expansion and while business confidence in the year ahead remained optimistic, it deteriorated to a 5-month low. At the same time, inflationary pressures eased and softer input costs allowed factory gate prices to be reduced for the first time since September 2020.

In terms of national PMIs, the best performing country was Greece (51.5), which was the only member state to post above 50. Spain (48.4) and Ireland (47.5) were not too far behind but Italy (45.9), France (45.7), the Netherlands (44.2), Germany (43.2) and, in particular, Austria (39.7) were deep in recession territory.

Business conditions in Eurozone manufacturing continue to deteriorate at an alarming rate and another increase in ECB interest rates later this month is the last thing the sector needs. Indeed, with the region's ECDI (minus 20) and ECDI-P (minus 23) both well below zero, economic activity in general is falling quite well short of market expectations

No revision is expected to the 44.6 flash print.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). Released by S&P Global, national data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These countries together account for an estimated 89 percent of Eurozone manufacturing activity.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.