Purchasing Managers Say Manufacturing in the Euro-12 Area Rose in May to the Highest Level Since October 2000

Except for a minor decline in February, 2004, the manufacturing sector of the Euro-12 area has been rising since June, 2003 according to the survey of some 3000 purchasing managers surveyed by NTC Research Ltd. for Reuters Group Plc. The data are presented in the form of diffusion indexes with a value above 50 representing expansion, while one below 50 indicates contraction. For the area as a whole, the index rose 1.45% from 53.95 in April to 54.73 in May and is now above the level reached in October 2000.

Data are available for six of the component countries: Germany, France, Italy, the Netherlands, Spain and Ireland. All except Spain improved in the month and all are well above levels of a year ago.

While the manufacturing data in April and May suggest continued growth or even some acceleration in Gross Domestic Product for the Euro-12, there is cloud on the horizon in the form of higher oil prices. According to the purchasing managers, prices of inputs in the manufacturing process rose 4.14% in May and were just over 50% above prices a year ago. The rise in oil prices accounts for much of rise in input prices.