The final estimate of the manufacturing index should print at 51.9 in May, slightly lower than the flash estimate of 52.3, decreasing from the level in April (52.0). The softening in the manufacturing PMI is due to corporate spending and export growth taking time to respond to the positives of a lower oil price and weaker euro. Further, policy uncertainty caused by Greece and slow reform process are at play. In the coming months, increasing oil prices suggests that the driver of the manufacturing sector, domestic demand, will become less prominent. This kind of PMI level points to GDP growth of close to 0.4%, which is in line with the flash estimate of Q1 growth and the forecast for Q2 2015. Looking at the regional breakdown, the French PMI for the manufacturing sector continues to lag and should recover over the next few months. “We expect the final estimate to be revised upward from 49.3 (flash) to 49.6”,says Societe Generale.In Italy, the index for the manufacturing sector should inch downward from its April level (from 52.7 to 53.8) and the German index should confirm the flash estimate at 51.4.
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