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Germany’s CPI rose 0.1% month-on-month in May (forecast: 0.1%; April: 0.4%), indicating a sharp deceleration in price growth. On a year-on-year basis, CPI held steady at 2.1% (forecast: 2.1%; April: 2.1%), underscoring stable but subdued inflationary pressures.

Eurozone GDP expanded 1.5% year-on-year in Q1 (forecast: 1.2%; Q4: 1.2%), marking an acceleration in annual growth. On a quarter-on-quarter basis, the economy grew 0.6% (forecast: 0.3%; Q4: 0.2%), underscoring a broadening recovery.

Germany’s industrial production fell 1.4% month-on-month in April (forecast: –0.9%; March: +2.3%), signaling a sharp pullback in factory output. Meanwhile, the trade surplus narrowed to €14.6 billion (forecast: €20.2 billion; March: €21.2 billion), reflecting weaker export performance.

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.00%, 2.15% and 2.40% respectively, with effect from 11 June 2025.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

Eurozone PPI fell 2.2% month-on-month in April (forecast: –1.8%; March: –1.7%), signaling a steeper decline in producer prices. On an annual basis, PPI growth slowed to 0.7% (forecast: 1.2%; March: 1.9%), highlighting mounting disinflationary pressures.

Germany’s factory orders rose 0.6% month-on-month in April (forecast: –1.5%; March: 3.4%), indicating a slowdown in growth but still beating bearish estimates.

The HCOB Eurozone Composite PMI for May rose to 50.2 (forecast: 49.5; April: 50.4), indicating modest expansion in overall activity. Meanwhile, the HCOB Services PMI remained in contraction at 49.7 (forecast: 48.9; April: 50.1), reflecting ongoing headwinds in the service sector.

Germany’s HCOB Composite PMI for May declined to 48.5 (forecast: 48.6; April: 50.1), marking a renewed contraction in overall business activity. The HCOB Services PMI also slipped to 47.1 (forecast: 47.2; April: 49.0), signaling continued weakness in the service sector.

France’s HCOB Composite PMI climbed to 49.3 in May, above the 48.0 forecast and up from April’s 47.8, yet still below 50, indicating that overall economic activity remains in slight contraction. The Services PMI improved to 48.9—exceeding the 47.4 estimate and April’s 47.3—but remains under 50, signaling continued weakness in the service sector despite recent gains.

Italy’s HCOB Composite PMI rose to 52.5 in May, above the 52.1 forecast, marking continued overall expansion in business activity. The Services PMI jumped to 53.2—up from April’s 52.9 and beating the 52.1 estimate—signalling robust growth in the service sector.

Spanish industrial production rose 0.6% YoY in April—below the 0.9% forecast—signalling sluggish factory output. Meanwhile, the HCOB Spain Services PMI fell to 51.3 in May from April’s 53.4 and missed the 52.8 forecast, indicating moderating expansion in the service sector.

The euro area jobless rate held at 6.2% in April, matching forecasts and down from 6.3% in March, reflecting continued resilience in labor markets.