Growth in Germany's private sector accelerated in May to hit the highest level so far this year, a survey showed on Monday, suggesting Europe's largest economy will extend its surprisingly strong start to the year into the second quarter. Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services activity that accounts for more than two-thirds of the German economy, rose to 54.7 in May from 53.6 in April. The PMI sub-index for manufacturing edged up to a five-month high of 52.4 as companies in the sector saw their output rise at the strongest rate so far this year. The sub-index for business activity in services rose to 55.2, the strongest reading since February, with jobs being created at the fastest rate since December 2015.

 

Tuesday's session brought ZEW Economic Sentiment data. The ZEW Indicator of Economic Sentiment for Germany has declined slightly in May 2016. The index has decreased by 4.8 points compared to the previous month, now standing at 6.4 points, missing forecasts on an incline to 13.2. "The strong growth of the German economy in the first quarter of 2016 appears to have surprised the financial market experts. However, they seem not to expect the economic situation to improve at the same pace going forward. 24 May 2016 Uncertainties regarding developments such as a possible Brexit currently inhibit a more optimistic outlook," says Professor Achim Wambach, PhD, President of ZEW.

 

The assessment of the current situation in Germany is improving. Growing by 5.4 points, the index now stands at 53.1 points. Financial market experts’ sentiment concerning the economic development of the Eurozone has dropped. The Indicator of Economic Sentiment for the Eurozone has decreased by 4.7 points to a reading of 16.8 points. Analysts were expecting increase to 23.4. Gaining 2.9 points in May 2016, the indicator for the current situation in the Eurozone has reached a value of minus 9.2 points.

 

Wednesday was marked by German Business Climate data. German business sentiment improved to the strongest level in five months in May, a sign that growth momentum in Europe’s largest economy remains strong. The Munich-based Ifo institute’s business climate index rose to 107.7 from a revised 106.7 in April. That beat the median estimate in a Bloomberg survey of economists, which was for an increase to 106.9. “German industry doesn’t seem too concerned about Brexit,” Clemens Fuest, president of the Ifo Institute, said in an interview with Bloomberg Television.

 

This week markets will be looking at:

 

Spanish Flash CPI (Monday 9:00)

German Prelim CPI (Monday)

German Unemployment Change (Tuesday 9:55)

M3 Money Supply (Tuesday 10:00)

CPI Flash Estimate (Tuesday 11:00)

Spanish Manufacturing PMI (Wednesday 9:15)

Spanish Unemployment Change (Thursday 9:00)

Minimum Bid Rate/ECB Press Conference (Thursday 14:30)