Private sector output in Germany expanded at the fastest pace in over six years this month, boosting optimism over the euro zone's largest economy. The preliminary German manufacturing purchasing managers’ index inched up to a 73-month high of 59.4 this month from a final reading of 58.2 in April. Analysts had expected the index to dip to 58.0 in May. The flash services purchasing managers’ index declined to 55.2 this month from 55.4 in April, disappointing expectations for a reading of 55.5.
The German economy is firing on all cylinders, and a surge in sentiment suggests it has staying power. The Ifo institute’s confidence index rose to 114.6 in May from 113 in April, beating the median forecast of economists in a Bloomberg survey. Gauges of both current conditions and business expectations improved. German manufacturing and services activity accelerated in May, according to a survey of purchasing managers. A similar report for the euro area showed that the economy is growing at a pace that would warrant a tightening of monetary policy if it wasn’t for weakening inflation.
This week markets will be looking at:
German Prelim CPI (Tuesday)
Spanish CPI (Tuesday 9:00)
CPI Flash Estimate (Wednesday 11:00)
Spanish Manufacturing PMI (Thursday 9:15)
