The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Eurozone inflation in May at 3.2% – core inflation 2.5%
Inflationary pressure in the euro area increased as expected in May, with core inflation rising more sharply than forecast. According to a report from Eurostat, consumer prices rose by 0.1 percent compared to the previous month and were 3.2 (April: 3.0) percent above the level of the same month last year. Economists surveyed by Dow Jones Newswires had forecast a monthly price increase of 0.2 percent and an annual increase of 3.2 percent. Core consumer prices rose by 0.3 percent on a monthly basis and 2.5 (2.2) percent on an annual basis. Rates of 0.2 and 2.4 percent were expected.
Commerzbank: ECB raises interest rates in June and in the 3Q
Commerzbank economist Vincent Stamer expects the Council of the European Central Bank (ECB) to decide to raise key interest rates by 25 basis points next week. “A further interest rate hike is likely to follow in the third quarter,” he writes in a comment on the May consumer price data for the euro area. Without a quick and significant change in the situation in the Persian Gulf, he believes inflation will likely settle at a good 3 percent. “The core rate could even increase significantly in the second half of the year due to indirect effects of high energy prices,” he calculates. The Purchasing Managers’ Index shows that companies want to pass on high costs, especially in the manufacturing sector. “And according to the ECB, consumers’ inflation expectations for three years in advance have also leveled off at the elevated level of 3 percent.”
ECB-Interest rate increase probably – weak economy makes outlook unclear
The rise in inflation in the Eurozone to 3.2 percent in May is increasing pressure on the European Central Bank to raise interest rates next week, MHA’s Joe Nellis writes in a commentary. “Underlying pricing pressures remain strong, with services inflation and wage growth continuing, businesses passing on costs and global instability driving up energy and transport costs,” he says. Before the war, markets had expected the ECB to cut interest rates to support a weakening economy. “The fact that even a small hike is sparking concerns about the euro zone’s prospects says a lot about the economy’s underlying structural problems.”
VDMA: Stagnation in incoming orders in April
German mechanical and plant engineering experienced a noticeable slowdown in April and ultimately recorded zero growth. After the strong previous month, companies showed robust foreign business in the face of geopolitical crises and the war in the Gulf region, but domestic demand remained weak. In real terms, total orders remained at the previous year’s level compared to the same month last year, as the Association of German Mechanical and Plant Engineering (VDMA) announced. Domestic orders fell by a real 7 percent. For other countries, however, there was a real increase of 4 percent.
China’s economic growth is expected to slow sequentially
China’s economic growth is likely to slow sequentially in the second quarter, according to UOB economist Ho Woei Chen. The latest Purchasing Managers’ Indices (PMIs) indicate that China’s manufacturing sector remains in expansion territory but is losing momentum, says the economist. This is likely due to weaker external demand and cost pressures caused by the situation in the Middle East, she writes in a research note. The data underpinned the slowdown evident in broader macroeconomic indicators in April, the economist said.
Amro – Inflation in Asia is likely to accelerate further due to the Middle East conflict
Inflation in Asia is likely to rise further amid ongoing supply disruptions caused by the Middle East conflict, according to the Asean+3 Macroeconomic Research Office (Amro). Overall inflation in the region is forecast to be 1.8 percent in 2026, Amro said on Tuesday. This is an increase from the April forecast of 1.4 percent. A decline to 1.5 percent is expected for 2027.
Production in Southeast Asia is beginning to stabilize
Manufacturing in Southeast Asia is beginning to stabilize from the shock caused by the Iran war, says Miguel Chanco of Pantheon Macroeconomics. The economist notes that the outlook for the region continues to vary greatly from country to country. The PMI indicators for Vietnam and Thailand remained firmly in expansionary territory in May, but Malaysia slipped into contraction. New orders were not supported by foreign demand as the new export orders component of the Asean-wide PMI data fell deeper into the red, Chanco said.
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(END) Dow Jones Newswires
June 02, 2026 07:30 ET (11:30 GMT)