(Alliance News) - The eurozone manufacturing sector remained in contraction in May but got closer to stabilisation, survey results from S&P Global showed on Monday.

The Hamburg Commercial Bank manufacturing purchasing managers' index rose to 49.4 point in May from 49.0 in April, edging closer to the 50-point no-change mark. The final score was in line with the flash reading published late last month and reflects a 33-month-high.

The PMI reading indicates a further easing of the manufacturing sector slowdown, S&P Global said, with the headline index reaching its highest level since August 2022.

The HCOB manufacturing PMI output index remained unchanged in May from 51.5 points in April, reflecting continued expansion, and matching the flash reading last month.

"Euro area manufacturing output increased again in May, marking three successive monthly expansions. The rate of growth was unchanged from that seen in April and therefore the joint-quickest since March 2022. That said, the upturn was only modest overall," said S&P Global.

S&P added that demand conditions remained "broadly stable" midway through the second quarter, indicating an improvement considering that new orders had previously declined sharply on average since May 2022.

In terms of business sentiment, the data detailed that confidence improved to its highest level since February 2022.

HCOB Chief Economist Cyrus de la Rubia commented: "The upward trend in the headline PMI is still continuing, pointing towards a recovery that is progressing. That is backed up by the rise in production we have seen since March. What is especially encouraging is that production has picked up across all four major eurozone economies, which really highlights how broad-based this recovery is.

"With output rising for three months in a row, historical patterns suggest there is a 72% chance we will see another increase in the next month. Of course, one big risk on the horizon is the possibility of the US significantly hiking tariffs on EU imports. That could definitely cast a shadow over the outlook."

The manufacturing PMI features a survey of 3,000 private sector firms in the eurozone, with responses collected from May 12 to 22.

By Christopher Ward, Alliance News reporter

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