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Euro zone manufacturing PMI falls to 7-month low

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Forex Pros - Manufacturing activity in the euro zone fell more-than-expected in May, dropping to a seven-month low, preliminary data showed on Monday.

In a report, market research group Markit said that its preliminary manufacturing purchasing managers index fell to a seasonally adjusted 54.8 in May, down from 58.0 in April, whose figure was upwardly revised from 57.7.

Analysts had expected the index to decline to 57.6 in May.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

The report also said that service sector activity in the euro zone fell more-than-expected in May, dropping to a five-month low.

The preliminary services purchasing manager's index fell to a seasonally adjusted 55.4 in May, down from 56.7 in April, whose figure was revised down from 56.9.

Analysts had expected the index to ease down to 56.6 in May.

Commenting on the report, Chris Williamson, chief economist at Markit said, "Growth of output and employment remains very lop-sided, however, fuelled by France and Germany while the rest of the region saw a near-stagnation of output in May and a further drop in employment."

Following the release of the data, the euro was down against the U.S. dollar, with EUR/USD dropping 0.94% to hit 1.4023.

Meanwhile, European stock markets were sharply lower. The EURO STOXX 50 plunged 1.75%, France's CAC 40 sank 1.7%, the FTSE 100 fell 1.5%, while Germany's DAX slumped 1.7%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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