Investing.com - Economic activity in the euro zone fell to a 16-month low in May, underlining concerns over the health of the region's economy, preliminary data showed on Monday.
In a report, market research group Markit said that its Flash Euro Zone Composite Output Index, which measures the combined output of both the manufacturing and service sectors dipped from 53.0 in April to 52.9 in May, below forecasts for 53.2.
The flash services purchasing managers’ index held steady at 53.1 this month, unchanged from April and missing expectations for a reading of 53.3.
The preliminary euro zone manufacturing purchasing managers’ index inched down to a seasonally adjusted 51.5 this month from a final reading of 51.7 in April. Analysts had expected the index to rise to 51.9 in May.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The May Flash PMI reinforced the picture of subdued growth of euro zone economic activity, with few signs of any imminent improvement. With new business growth also sliding to the lowest since January 2015, the survey data point to a strong likelihood of output growth remaining subdued or even weakening further in June.
The rate of business activity expansion in the dominant service sector was unchanged for a third successive month. The rate manufacturing output growth was meanwhile the second-weakest since February 2015.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “A disappointing flash euro zone PMI for May adds further to the suggestion that the robust pace of economic growth seen in the first quarter will prove temporary. The PMI is signaling lackluster GDP growth of only 0.3% in the second quarter.”
EUR/USD was at 1.1212 from around 1.1222 ahead of the release of the data, while EUR/GBP was at 0.7732 from 0.7737 earlier.
Meanwhile, European stock markets were lower. The EURO STOXX 50 fell 0.9%, Germany's DAX dropped 0.6%, France’s CAC 40 slumped 0.9%, while London’s FTSE 100 dipped 0.3%.