Mubasher: Flash estimates for the Eurozone showed that manufacturing growth slowed in May.

The final IHS Makit Eurozone purchasing managers’ index (PMI) registered 54.1 in May down from 55.1 in April, which “continued to signal robust growth of business activity…by remaining well above the 50 no-change mark,” data released on Wednesday showed.

However, the latest increase marks the lowest level of growth in a year-and-a-half in the Eurozone’s manufacturing sector. It also extended the cooling expansion trend for the fourth month in a row.

The growth rate for both the manufacturing and services sectors in the Eurozone has deteriorated in May, the report said.

While the manufacturing PMI output was seen at 54.5 in the fifth month of the year from 56.2 in April, marking the lowest level seen since 18 months, the services PMI registered a month-on-month slowdown to 53.9, reaching 16-month low.

The growth rate was slower in France, as it reached the weakest level since 16 months, while German business activity showed the slightest increase in 20 months.

Inflows of new orders increased at weaker pace as expansion waned for the fifth successive month, registering the lowest level since October 2016.

In terms of new business growth, both Eurozone manufacturing and services sectors logged a 19-month low rate.

Reduced new order intakes in the manufacturing sector were partially attributed to lower export growth which registered the weakest rise since August 2016.

As for outlook for business activity levels, expectations fell in May to the lowest level seen in 18 months in both sectors.

However, the overall level of optimism remained above the long-run average, while less positive expectations have manifested the past year’s strong levels.

“Input cost inflation accelerated to a three-month high, buoyed in part by higher fuel and energy costs, alongside signs of rising wage pressures in some countries,” the IHS Markit report added.

On the other hand, average selling prices went up in the fifth month of the year, with the slowest rate since September, with reports of difficulties in surging prices amid weak demand.

“Job creation is also continuing to run at an encouragingly robust rate and optimism about the business outlook remains above its long-run average,” IHS Markit chief business economist Chris Williamson commented.

By 9:09 am GMT, the EUR/USD pair dropped 0.35% to $1.1738.