09 June, 2017
Companies wanted extra staff to handle new orders and increase capacity, Markit said, as backlogs of work lengthened by the most in six years.
The May result was slightly lower than a preliminary reading of 54.0 but remained comfortably above the 50-point line.
As the bloc's economic performance improves, the European Central Bank is likely to signal a move away from its ultra-easy monetary policy by September, economists in a Reuters poll forecast last month.
Manufacturing activity in the United Kingdom decreased less than expected in May, easing concern over the British economy, industry data showed on Thursday.
Despite sterling's prolonged weakness, input prices for construction firms rose at the slowest pace for seven months. Anything above 50 signals that activity levels are improving while a reading below suggests they're deteriorating.
IHS Markit said that costs for raw materials and finished goods also fell, cementing the view that the recent lift in producer price inflation is now well and truly over.
Here is the chart:IHS Markit
New business rose at a faster pace, and while new export orders slowed, the rate of growth still remained substantial, according to the latest Purchasing Managers Index for the sector.
That was less than economists' forecast of 50.1 and extends a streak of declines to three months.
Investec Ireland chief economist Philip O'Sullivan said the Irish economy appeared to be enjoying the benefit of an improving worldwide backdrop, with his bank forecasting the world economy will grow 3.9 percent next year, its highest growth rate since 2011.
Factory job creation was especially strong, with the index rising to 56.2, the highest since May 1998, from 55.6 a month earlier.
"The rise in the PMI reflected stronger growth of output, new orders and employment, as well as longer suppliers' delivery times", it added.
The seasonally-adjusted headline NEVI PMI stood at 57.6, in May, just off April's 57.8. The April expansion of the index was the first in two years.
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