The Eurozone Purchasing Managers’ Index (PMI) experienced a decline in June, falling from 52.8 in May to 50.3, according to data published by S&P Global and Hamburg Commercial Bank. This drop in the composite index was attributed to decreases in both services and industrial activity indicators.
The PMI for services in the European Common Monetary Area also experienced a significant decline, dropping from 55.1 in May to 52.4 in June. This decrease was larger than anticipated by analysts, who had predicted a PMI of 54.5. On the other hand, the industrial PMI fell even more sharply, decreasing from 44.8 to 43.6, marking a 37-month low. Analysts had expected the industrial PMI to remain stable at 44.8.
S&P Global highlights that although the composite index remained above the threshold of 50.0, indicating expansion in activity, the level was weaker than the previous four months, suggesting a notable loss of growth momentum. The 2.5-point drop in the index was the largest seen in a year. This slowdown was foreshadowed by a near stagnation in new business flows in May.
The researchers note that the worsening trend in new business flows for goods and services in June, with new orders falling for the first time since January, also indicates potential downside risks for production in July.
The manufacturing sector has remained the main area of weakness, with industrial production contracting for the third consecutive month and at the fastest pace since October. This decline in production can be attributed to a significant slowdown in new orders for goods. Conversely, the growth of the service sector output has slowed down considerably, as the recent revival in spending in the sector has lost steam. Business activity in the services sector grew at its slowest pace since January, falling sharply from its peak in April.
In summary, the Eurozone PMI experienced a decline in June, with both services and industrial activity indicators showing decreases. While the composite index remained in expansion territory, the level was weaker than previous months, indicating a loss of growth momentum. The manufacturing sector continued to struggle, with industrial production declining for the third month in a row. The service sector also experienced a slowdown in output growth, as the earlier revival in spending lost momentum.
Additional piece:
The recent decline in the Eurozone PMI raises concerns about the region’s economic outlook. While the composite index still indicates expansion, the weaker level suggests a potential loss of growth momentum. This slowdown in activity has been attributed to various factors, including a drop in new business flows and a significant decrease in industrial production.
One key area of weakness is the manufacturing sector, which has experienced contraction for the third consecutive month. This decline is mainly driven by a slowdown in new orders for goods. The decrease in production highlights the challenges faced by manufacturers in the Eurozone, including softer demand and global trade uncertainties.
On the other hand, the service sector, which had been a source of growth in previous months, also showed signs of slowing down. The recent revival in spending in the sector appears to have lost steam, with business activity growing at a slower pace and new business growth moderating.
The weakening economic indicators in the Eurozone suggest potential downside risks for future production and overall economic performance. The decrease in new orders, both for goods and services, is a concerning sign, as it indicates a decline in demand. This could lead to reduced output and potentially impact employment levels in various sectors.
Furthermore, the uncertainties surrounding global trade, including trade tensions between major economies, pose additional challenges for the Eurozone. As trade tensions persist, businesses may become more cautious in their investment and expansion plans, which could further dampen economic growth.
To address these challenges and stimulate economic activity, policymakers in the Eurozone may consider implementing measures to boost domestic demand and investment. This could involve promoting innovation and digitalization, supporting small and medium-sized enterprises, and investing in infrastructure projects.
In conclusion, the decline in the Eurozone PMI highlights the challenges faced by the region’s economies. The weakening indicators in both the manufacturing and service sectors raise concerns about the sustainability of economic growth. Policymakers need to carefully monitor the situation and take appropriate measures to support domestic demand and address the uncertainties posed by global trade tensions. By doing so, they can help maintain stability and foster long-term economic growth in the Eurozone.
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The composite purchasing managers’ index (PMI) in the euro zone fell from 52.8 in May to 50.3 in June, according to preliminary and seasonally adjusted data published this Friday (23) by S&P Global, in association with Hamburg Commercial Bank (HCOB). During the month there was a drop in activity in both services and industrial indicators, which are part of the composite index.
The European Common Monetary Area PMI services fell from 55.1 in May to 52.4 in June, hitting a five-month low. The pullback was larger than expected by the Refinitiv analyst consensus, which was 54.5.
The industrial PMI fell even more sharply, from 44.8 to 43.6 in one month, hitting a 37-month low. In this case, the consensus of analysts predicted stability, at 44.8 in June.
According to S&P Global, although the composite index exceeded the 50.0 threshold for the sixth consecutive month in June, which separates expansion from contraction in activity, the level was weaker than the previous four months, indicating a considerable loss of growth momentum. The 2.5-point drop in the index was the biggest in a year.
Still according to the researchers, the slowdown had been signaled in advance by a near stagnation in new business flows in May.
With the new business trend measured in goods and services worsening further in June, as new orders fell for the first time since January, the deteriorating demand environment also indicates downside risks to production in July.
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Manufacturing remained the main area of weakness, with industrial production falling for the third straight month and at the fastest pace since last October. “The sharp drop in production was driven by an increasingly pronounced slowdown in new orders for goods, which fell by the most since last October,” S&P Global said.
Meanwhile, service sector output growth has slowed considerably as the recent revival in spending in the sector has lost steam. “Business activity in the services sector grew at its slowest pace since January, falling sharply from its recent peak in April, with new business growth moderating to record only a modest increase in demand, contrasting with the strong gains seen in the three months to May. he reported.
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PMI composto na zona do euro recua de 52,8 em maio para 50,3 em junho; serviços perdem força
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