And the European position (from BNP paribas - 2 June 2005) -...

And the European position (from BNP paribas - 2 June 2005) - talk about a damp squid:

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The euro zone Manufacturing PMI decreased in May for the third month in a row, and reached its lowest level since August 2003 (48.7 versus 49.2 in April). Although it declined less markedly in May, the indicator appears in the contraction zone for the second month in succession. Thus, the manufacturing sector is no engine for GDP growth in Q2, which is set to be subdued as a whole. Once more, the European Commission revised down its forecasts for Q2 (now between 0.1% and 0.5% q/q). Yet, it kept its
forecast unchanged for Q3 between 0.2% and 0.6%.
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Growth will be mediocre in Q2

Growth breakdown in Q1, together with the Manufacturing PMI released this morning, confirmed that GDP growth in Q2 will be both lacklustre and mainly driven by services.

The euro zone Manufacturing PMI lost ground for the third month in succession, to reach 48.7 in May. Thus, it comes up for the second time in a row in the contraction zone, in the wake of the “new orders” component (48.5 in May, after 48.9 in April). This component hit its lowest level since June 2003.
Although the decline in both indicators slowed down, it is a bad omen for investment in Q2. Investment already registered a marked drop in Q1, while these indicators were still in expansion zone.

The employment outlook remains directed to the South in the manufacturing sector.

NOTE THIS:
******True, the employment component has been in the contraction zone since June 2001, but, in May, it
reached its lowest level since September 2003 (47.5).

The manufacturing sector won’t take part in any decrease in the unemployment rate, which remained high at 8.9% in April, according to Eurostat’s data released this morning.