The euro area private sector activity grew the most in more than three years in May as economies continued to open up from virus restrictions, flash survey data from IHS Markit showed on Friday.

The composite output index rose to 56.9 from 53.8 in the previous month. The score was expected to climb moderately to 55.1.

By sector, the upturn continued to be led by manufacturing, where output grew for an eleventh straight month. Nonetheless, the manufacturing Purchasing Managers’ Index dropped marginally to 62.8 from 62.9 in April. Economists had forecast the score to fall to 62.5.

The services PMI came in at 55.1 versus 50.5 a month ago. The reading was also above economists’ forecast of 52.3.

New order growth surged to the highest since June 2006, outpacing growth of output to the greatest extent in the survey’s 23-year history. Employment grew for a fourth successive month in May.

The survey showed that business outlook improved with optimism about the year ahead reaching the brightest since comparable data on future sentiment were available in 2012.

Backlogs of uncompleted orders consequently rose to a degree not surpassed since that series began in November 2002.

Average input prices rose at the sharpest rate since March 2011, led by the largest rise in factory input costs recorded since survey data were first available 24 years ago.

At the same time, average prices charged for goods and services advanced at the fastest pace since comparable data were first available in 2002.

By country, growth accelerated especially sharply in France. Germany also reported that business output rose at an increased rate after growth waned in April.

The French private sector grew at the fastest rate since July 2020, and was also the second-strongest since February 2018.

The composite output index climbed more-than-expected to 57.0 in May from 51.6 in the previous month. The score was forecast to rise to 53.7.

Manufacturing production continued to grow at a faster rate than services activity. The factory PMI came in at 59.2 in May, up from 58.9 in the previous month and the expected level of 58.5.

At the same time, the services PMI improved to a 10-month high of 56.6 from 50.3 a month ago and was above economists’ forecast of 53.0.

Germany’s private sector activity experienced a slight pick-up in May, driven by an improved performance across services.

The composite output index advanced to 56.2 in May from 55.8 in April. But the reading was below the expected level of 57.1.

The services PMI hit a 10-month high of 52.8 versus 49.9 a month ago and the economists’ forecast of 52.0.

The manufacturing PMI fell to 64.0 in May from 66.2 in the previous month. Economists had forecast the reading to drop to 65.9.

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