Manufacturing activity showed scant sign of picking up across Europe in May as demand stayed stubbornly weak. As Grace Pascoe reports its highlighting the need for central banks to continue supporting growth.
The euro zone engine has suffered a stutter. Factory growth in Germany slowed in May - to a three month low. Manufacturing across the whole of the euro zone was also worse than expected With the Markit's Purchasing Managers' Index reading 52.2 - just two points above the level considered a recession. Jan Randolph is from IHS Global Insight. SOUNDBITE (ENGLISH) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH: "It is interesting if you break down the euro zone numbers, yes it is true that Germany underperformed and I think a lot of that is down to the greater sensitivity the German economy has to global trends... whereas the rest of Europe, France, Italy, Spain did relatively well." French manufacturing activity improved slightly but it's still below the magic 50 mark. And stubbornly weak demand remains a problem across the bloc. The surveys come less than 3 months after the European Central Bank embarked on a 1 trillion-euro stimulus program. And they highlight the need for continued growth stimulus, even though it's now 7 years since the financial crash. SOUNDBITE (ENGLISH) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH: "Whether the private sector, meaning the corporates and households are now strong enough to take on the baton of growth in a self-sustaining way is still in question and there is the big question for the U.S. and the UK but also for the euro zone, at what point monetary policy can really genuinely turn, in other words it becomes less accommodative than it has been." There were some bright spots though. Spanish manufacturing grew at its fastest rate in over eight years and Italian factory output hit a four-year high.