PMIs day but stable market

Today, the forex markets exhibited minimal overall movement, mostly sticking to established ranges. Noteworthy, however, were the slight gains by the Japanese Yen, buoyed by declines in US and European benchmark treasury yields. Despite these gains, the Yen's rise remains modest and hasn't countered recent declines. In contrast, the Swiss Franc showed resilience, emerging as a strong performer by making strides in its recovery against both the Euro and Sterling.

UK Manufacturing sector: Signs of revival

May brought a positive shift for the UK's manufacturing sector, with the PMI index climbing to 51.2 from April's 49.1, marking its highest level since July 2022. This increase was seen across all main sub-sectors, boosting business optimism to a 27-month high.

Despite the upbeat outlook, the data revealed a complex scenario for price pressures. Factory gate output charge inflation rose for the fifth consecutive month, reaching its highest point in a year. Nevertheless, a notable easing in input cost increases could help mitigate long-term price pressures.

Eurozone manufacturing: Gradual improvement

In the Eurozone, the PMI Manufacturing index improved to 47.3 in May from April's 45.7, suggesting a possible turnaround after over a year of decline.

Country-specific data painted a diverse picture. Greece led with a PMI of 54.9, though this was a four-month low. Spain followed with a 26-month high of 54.0, and the Netherlands hit a 21-month high at 52.5. France recorded a modest increase to 46.4, and Austria reached a 15-month high at 46.3. Italy and Germany remained below the neutral mark with PMIs of 45.6 and 45.4, respectively, yet both showed improvement from previous months.

Germany, though still trailing among the major Eurozone economies, is narrowing the gap with Italy. France’s manufacturing sector has shown progress but remains behind, while Spain continues to experience growth.

Japan’s manufacturing sector: A positive shift

For the first time in a year, Japan's PMI Manufacturing index edged above the neutral mark to 50.4 in May, up from 49.6 in April. This indicates a stabilization in both output and new orders, with expansions in employment and input stocks also contributing to the positive trend.

China's Manufacturing gains momentum

China's manufacturing sector showed robust activity in May, with the Caixin PMI rising to 51.7 from 51.4, exceeding expectations. This growth was driven by the strongest production expansion since June 2022 and the fastest increase in purchasing activity in three years. However, input price inflation reached a seven-month high, indicating potential cost pressures ahead.