Business data firm IHS Markit said last week that its composite Purchasing Managers Index (PMI) for the eurozone fell to 54.1 in May from 55.1 in April. This was the lowest reading in 18 months, and a weaker outcome than the 54.8 reading forecast by economists.

Business activity in the region slowed for the fourth straight month – a sign that economic growth has yet to rebound from a surprisingly weak showing in the first quarter.

The PMI is based on survey responses from 5,000 businesses. Readings above 50.0 signal an expansion in activity.

Official figures for the first three months of the year recorded a sharp slowdown, which economists have largely attributed to a combination of unusually cold weather, strikes in the currency bloc’s two largest members, and a severe influenza outbreak in Germany.

In the meantime, retail sales in the UK rose by a better-than-expected 1.6 per cent in April as consumers resumed spending after unusually cold weather earlier in the year.

However, the Office for National Statistics (ONS) said that the sector remained broadly subdued. In the three months to April, sales rose just 0.1 per cent on the previous quarter. April’s figure was underpinned by a 4.7 per cent surge in petrol sales, after falling in March because of the snow disruption.

“The underlying position remains subdued, with the volume of goods sold over the last six months broadly unchanged,” said Rob Kent-Smith of the ONS.

Finally, in the US, minutes from the latest Federal Reserve (Fed) meeting, which ended on May 2, reveal that officials are on track to raise rates again in June. The minutes also indicate that officials are less worried about inflation rising above two per cent – its current level and the Fed’s target rate – than they are about the rate of inflation dipping again.

Fed officials gave no indication that they are likely to speed up their pace of interest rate increases. Furthermore, officials continue to see the economy as strong, but they remain worried about global trade tensions, including potential damage from American and Chinese tariffs and the possibility that uncertainty over trade policy could already be disrupting business investment in the US.

This report was compiled by Bank of Valletta for general information purposes only.