The final estimate of the Euro area manufacturing index should print at 51.9 in May, slightly lower than the flash estimate of 52.3, decreasing from the level in April (52.0). The softening in the manufacturing PMI is due to corporate spending and export growth taking time to respond tothe positives of a lower oil price and weaker euro. Further, policy uncertainty caused by Greece and slow reform process are at play. In the coming months, increasing oil prices suggests that the driver of the manufacturing sector, domestic demand, will become lessprominent. This kind of PMI level points to GDP growth of close to 0.4%, notes Societe Generale.Looking at the regional breakdown, the French PMI for the manufacturing sector continues to lag and should recover over the next few months. As a result the final estimate likely to be revised upward from 49.3 (flash) to 49.6. In Italy, the index for the manufacturing sectorshould inch downward from its April level (from 52.7 to 53.8) and the German index should confirm the flash estimate at 51.4, said Societe Generale in a report on Monday.
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