Euro area June PMIs surprise sharply to the downside
By Alexander Bueso
Date: Friday 23 Jun 2023
(Sharecast News) - Activity in euro area factory and services slowed significantly in June, the results of a batch of closely watched surveys revealed.
Growth weakened the most in France, due in part to strikes, but activity in Germany also came close to a stand-still.
A downturn in manufacturing was marked across the single currency bloc.
The HCOB flash composite output Purchasing Managers' Index for the euro area dropped from 52.8 for May to 50.3 in July.
According to survey compiler S&P Global, the data pointed to "renewed weakness in the economy after the brief growth recorded in the spring".
New orders fell for the first time since January, employment growth softened and expectations of future output worsened.
Inflationary pressures however did abate with input costs rising at their slowest pace since December 2020, S&P Global said.
A separate flash PMI for services retreated from 55.1 to 52.4 (consensus: 54.9) - a 5-month low - while that for manufacturing dropped from 46.4 to 44.6 - an 8-month low (consensus: 46.8).
For both the factory and services PMIs, the 50 point level is the threshold that distinguishes between a contraction or expansion in the sector.
"After Eurozone GDP fell for the second time in a row in the first quarter, the probability has increased somewhat that the GDP change will again carry a negative sign in the current quarter, due in part to weak services activity in France," said Dr.Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
"Even if our baseline scenario of slightly positive Eurozone growth in the second quarter still becomes reality, the downward trend in the Composite PMI points to a difficult second half of the year as companies across all sectors face deteriorating order books."
-- More to follow --
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