Weak eurozone manufacturing does better in May

Eurozone manufacturing continued in the doldrums in May but showed a distinct improvement from April, in line with other recent economic data, a widely-watched survey showed Monday.

The Markit Eurozone Composite Purchasing Managers Index rose to a 15-month high of 48.3 in May, up from an initial reading for the month of 47.8 and compared with a four-month low of 46.7 in April.

The index however remained below the boom-and-bust line of 50 points, indicating that the sector continued to contract overall for a 22nd consecutive month.

Markit noted that Germany, Europe's largest economy, stood at 49.4, close to the cross-over point, while struggling Spain hit a 24-month high of 48.1.

France was at a 13-month high of 46.4, Italy 47.3, up for a fourth month, and bailed-out Greece hit 45.3, its best performance in 23 months.

"Although the euro area manufacturing economy continued to contract in May, it is reassuring to see the rate of decline ease to such a marked extent," Markit chief economist Chris Williamson said.

Williamson said the figures suggested the eurozone economy would shrink another 0.2 percent in the second three-months period of the year, extending the recession to seven quarters.

"Policymakers will nevertheless be pleased to see the downturn not getting any worse," he said, adding that France however "remains a key concern."

Howard Archer of IHS Global Insight said the report supported "hopes that overall manufacturing activity ... could be moving towards stabilisation, although it is not there yet."

Archer noted, however, that domestic demand remains under pressure from the austerity policies adopted to tame the debt crisis, along with tight credit and rising unemployment.