According to the report from IHS Markit, the eurozone manufacturing economy experienced a new record improvement in operating conditions during May. The headline PMI recorded 63.1, compared to 62.9 in April and its highest reading in the survey history (data for the eurozone have been available since June 1997). The headline index has now recorded readings above the 50.0 no-change mark that separates growth from contraction for 11 months in succession.

All three market groups once again recorded strong improvements in operating conditions during May. Investment goods producers were again the best performing, registering rapid gains in both output and new orders. The intermediate goods and consumer goods categories both saw stronger growth, with respective PMI readings for May close to survey record highs.

Growth of manufacturing output was the slowest recorded by the survey for three months, though it nonetheless remained close to March’s survey record with production again underpinned by rapid gains in new orders. May’s survey indicated that sales rose at the third-strongest rate in the survey history (surpassed only by increases seen in the preceding two months). New order books were swollen by increased demand from across domestic and international markets: new export business rose again at a historically sharp pace.

Placing constraints on production activities were ongoing difficulties in sourcing inputs from vendors. Deliveries from suppliers deteriorated at a severe and unprecedented rate during the month, as demand for inputs again exceeded the supply capabilities of vendors.

Finally, confidence about the future remained highly positive in May despite easing to its lowest in the past four months. Manufacturers remained buoyed by the potential opportunities over the coming year from the hoped-for further reopening of economies and easing of restrictions related to dealing with the COVID-19 pandemic.