Austria's PMI comes out a couple of days before Europe's. It fell in May, and Europe's
flash" estimate did. It's well correlated with Europe's PMI, because it is an entrepôt economy which is embedded in Europe, and because like Europe it depends on international trade. As such, the key is the rise in inflation, which is affecting demand. Bank Austria's/IHS Markit's headline was: Manufacturing sector continues to lose momentum as sharply rising prices hit demand
Central Banks can either ignore this rise in inflation, arguing that it is temporary, or they can tighten policy against it. I'm sure that this rise in inflation is more permanent, because of the breakdown of supply chains due to Covid and war. Even if it isn't, rising inflation will reduce real incomes, leading to a recession. And if CBs respond to inflation by upping rates, that will also lead to a recession. The last time we had commodity prices rising this strongly (and it's not just fuel and gas; it's also food prices) in 1972/73, we had a deep recession in 1974. It's going to be an interesting ride.
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