Eurozone industrial sentiment holds above 50 despite inflation and AI-driven cost pressures
Eurozone industrial sentiment deteriorated less sharply than feared in May, offering a rare glimmer of resilience amid persistent inflation pressures and uneven economic performance across the bloc. The purchasing managers’ index (PMI) for manufacturing fell by 0.6 points to 51.6, defying expectations of a steeper decline, according to data published by *Der Standard* . While the reading still signals expansion—any figure above 50 indicates growth—the divergence between member states remains stark, with Germany’s industrial sector struggling under high energy costs and weak external demand, while southern European economies show tentative signs of recovery.
The subdued but better-than-expected PMI reading comes as inflationary risks continue to cloud the outlook for monetary policy. Federal Reserve officials warn that artificial intelligence (AI), once hailed as a potential disinflationary force, may instead be stoking price pressures in the near term. St. Louis Fed President Alberto Musalem cautioned last week that "it would be risky to rely on the prospect of higher productivity growth in the future to solve our inflation problem today," emphasizing that current inflation remains stubbornly above the Fed’s 2% target . His remarks echo concerns from Fed Governor Lisa Cook, who highlighted that AI-related investment—including $1.5 trillion in planned data center spending—is already driving up prices for semiconductors, construction labor, and energy, adding another layer of inflationary pressure alongside geopolitical shocks like the Iran conflict and trade tariffs.
The disconnect between AI’s promise and its immediate economic impact is complicating central bankers’ calculus. While productivity growth has accelerated to 2.4% annually over the past three years—up from 1.5% in the 2010s—economists struggle to attribute the gains directly to AI adoption. A World Economic Forum survey suggests most sectors won’t see meaningful AI-driven productivity improvements for another two years, a delay that could force the Fed and the European Central Bank (ECB) to maintain restrictive monetary policies longer than anticipated. San Francisco Fed President Mary Daly noted that while "green shoots" of productivity growth are visible, "companies say they haven’t seen the productivity yet" .
For the eurozone, the industrial sentiment data underscores the fragility of the recovery. The ECB’s June policy meeting will be closely watched for signals on whether the central bank will proceed with its first rate cut since 2019, despite lingering inflation concerns. Analysts warn that even if the ECB moves to ease policy, the pace of cuts may be slower than markets expect, particularly if AI-driven demand continues to push up input costs. With the Fed signaling no imminent rate cuts and the Bank of England monitoring public-sector wage growth for inflation risks , the eurozone’s industrial sector faces a delicate balancing act: sustaining growth while navigating a global environment where technological optimism collides with stubborn price pressures.
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Articles
Eurozone: Industriestimmung trübte sich weniger ein als erwartet Einkaufsmanagerindex fiel im Mai um 0,6 Punkte auf 51,6 Punkte. Stimmungsbild in Eurozone ist höchst unterschiedlich
der standard · 5 days ago
Bank of England is watching public-sector pay for inflation risk, governor says reut.rs/4u7fV0m
bluesky bot · 5 days ago
Börsenbillionäre: Die glorreichen Sieben sind nun schon zu zwölft Die Billionenbewertungen am Finanzmarkt nehmen inflationär zu. Das Land der größten Träume auf dem Börsenparkett ist derzeit Südkorea.
faz · 5 days ago
![Fed officials warn AIs economic costs may arrive faster than benefits Dont count on AI to solve Americas inflation problem: Thats the message from several Federal Reserve officials who warn that the promise of an AI-fueled productivity boom might not justify cheaper money.Why it matters: How AI shapes inflation and productivity will be a defining question for the Fed under the leadership of Kevin Warsh, who has staked out a case that the technologys supply-side benefits justify keeping rates low.Some Fed officials say they see clearer evidence of AI-related investment boosting demand for labor, equipment and infrastructure than they do of widespread productivity gains.The upshot: Inflation risks look more immediate than any AI-related productivity benefits, especially as inflation remains stubbornly above the Feds target.What theyre saying: "I believe it would be risky to rely on the prospect of higher productivity growth in the future to solve our inflation problem today," St. Louis Fed president Alberto Musalem said in a speech last week."AI shows great promise as a transformative technology, but the risks of a miscalculation about its impact on productivity and inflation are too great," Musalem said."[A]t present, I believe we should keep our guard up against persistent above-target inflation today, rather than base monetary policy on the hope that we will have higher productivity growth tomorrow."The big picture: Warsh has argued that AI will be a "significant disinflationary force, increasing productivity and bolstering American competitiveness," as he wrote in a Wall Street Journal op-ed late last year.The theory is that if AI helps workers and businesses produce more with the same resources, the economy can grow faster without generating inflation, giving the Fed more room to lower interest rates.But policymakers want evidence that the productivity gains are here to stay.By the numbers: Productivity started to take off before most companies had adopted AI, making it difficult to know how much to credit AI for the productivity lift.Over the past three years, productivity has averaged about 2.4 annually, far stronger than the 1.5 rate seen during the 2010s, according to the Bureau of Labor Statistics.Between the lines: Internet-fueled productivity gains in the 1990s were visible "everywhere except in the statistics," San Francisco Fed president Mary Daly told Neil at the Reagan Economic Forum on Friday. "Weve got the productivity surge a little bit earlier this time. But whats problematic is its hard for economists or anyone to link it directly back to the AI investments. In fact, if you talk to companies, they say they havent seen the productivity yet," Daly said."Im bullish, but I want to see some more evidence that this is actually picking up durable, sustained gains in productivity — but I see all the green shoots there." The intrigue: A new World Economic Forum survey shows economists think most sectors wont see notable AI-driven productivity gains for another two years, a longer timeline than they anticipated at the start of 2026.Companies and investors in recent weeks have begun to publicly question whether the enormous costs of deploying AI are translating into output and efficiency gains.What to watch: Fed governor Lisa Cook pointed to signs that AI investment demand is pushing prices higher for chips, high-tech equipment and software, as well as for construction labor, electricity and water. That comes alongside price pressures from the Iran war and tariffs."[Y]et another shock to prices could be layered on from the heightened investment demand due to AI," Cook said in a speech last week, noting that companies have announced roughly $1.5 trillion in data center investment plans."Those figures suggest that substantial AI-related investment remains in the pipeline from data centers alone. Effects of this demand on prices are apparent."](https://images.axios.com/oeDYtI1IaTPjgvy9evNZgNRTXPg=/0x0:1920x1080/1366x768/2025/07/14/1752519557064.jpeg)
Fed officials warn AIs economic costs may arrive faster than benefits Dont count on AI to solve Americas inflation problem: Thats the message from several Federal Reserve officials who warn that the promise of an AI-fueled productivity boom might not justify cheaper money.Why it matters: How AI shapes inflation and productivity will be a defining question for the Fed under the leadership of Kevin Warsh, who has staked out a case that the technologys supply-side benefits justify keeping rates low.Some Fed officials say they see clearer evidence of AI-related investment boosting demand for labor, equipment and infrastructure than they do of widespread productivity gains.The upshot: Inflation risks look more immediate than any AI-related productivity benefits, especially as inflation remains stubbornly above the Feds target.What theyre saying: "I believe it would be risky to rely on the prospect of higher productivity growth in the future to solve our inflation problem today," St. Louis Fed president Alberto Musalem said in a speech last week."AI shows great promise as a transformative technology, but the risks of a miscalculation about its impact on productivity and inflation are too great," Musalem said."[A]t present, I believe we should keep our guard up against persistent above-target inflation today, rather than base monetary policy on the hope that we will have higher productivity growth tomorrow."The big picture: Warsh has argued that AI will be a "significant disinflationary force, increasing productivity and bolstering American competitiveness," as he wrote in a Wall Street Journal op-ed late last year.The theory is that if AI helps workers and businesses produce more with the same resources, the economy can grow faster without generating inflation, giving the Fed more room to lower interest rates.But policymakers want evidence that the productivity gains are here to stay.By the numbers: Productivity started to take off before most companies had adopted AI, making it difficult to know how much to credit AI for the productivity lift.Over the past three years, productivity has averaged about 2.4 annually, far stronger than the 1.5 rate seen during the 2010s, according to the Bureau of Labor Statistics.Between the lines: Internet-fueled productivity gains in the 1990s were visible "everywhere except in the statistics," San Francisco Fed president Mary Daly told Neil at the Reagan Economic Forum on Friday. "Weve got the productivity surge a little bit earlier this time. But whats problematic is its hard for economists or anyone to link it directly back to the AI investments. In fact, if you talk to companies, they say they havent seen the productivity yet," Daly said."Im bullish, but I want to see some more evidence that this is actually picking up durable, sustained gains in productivity — but I see all the green shoots there." The intrigue: A new World Economic Forum survey shows economists think most sectors wont see notable AI-driven productivity gains for another two years, a longer timeline than they anticipated at the start of 2026.Companies and investors in recent weeks have begun to publicly question whether the enormous costs of deploying AI are translating into output and efficiency gains.What to watch: Fed governor Lisa Cook pointed to signs that AI investment demand is pushing prices higher for chips, high-tech equipment and software, as well as for construction labor, electricity and water. That comes alongside price pressures from the Iran war and tariffs."[Y]et another shock to prices could be layered on from the heightened investment demand due to AI," Cook said in a speech last week, noting that companies have announced roughly $1.5 trillion in data center investment plans."Those figures suggest that substantial AI-related investment remains in the pipeline from data centers alone. Effects of this demand on prices are apparent."
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Smertegrense rykker nærmere: – Har brukt opp bufferne Verden begynner å tære på bufrene i oljelagrene, og prisene vil kunne stige om noen uker, tror eksperter.
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