According to provisional data released by S&P Global, the manufacturing sector in the eurozone is slowly increasing. The manufacturing PMI output index in May is at 47,4, comfortably beating the index for April of 45,7 and higher than the forecast of 46,2.

These data sets are closely watched for signs of recovery in key sectors of the economy such as production and services. If the index falls below the 50 level, it implies a contraction while values above the 50 level indicates that the sector is growing. This time, the manufacturing PMI increased closer to the neutral mark, reaching its highest level since April 2023.

The increase of the manufacturing output PMI led to a higher eurozone’s composite PMI from 51,7  to 52,3, the highest in a year. Meanwhile, the Services PMI Business Activity Index remained unchanged at 53.3, slightly below the forecast of 53,5.

“The eurozone’s composite PMI increased led by a jump in the manufacturing output PMI. With inflation softening, the outlook for the region’s economy is increasingly benign” noticed an analyst from ING bank in a note. 

The fact that the European economy is starting to perform much better is a bullish factor for carbon prices. In yesterday’s trading, the market reacted to better-than expected PMIs with EUAs trading briefly at €78,10, a new record for the past five months.