The preliminary estimates for the HCOB Eurozone manufacturing purchasing managers’ index (PMI) figure for June was revealed on Friday morning, coming in at 45.6, according to S&P Global. This was a six-month low, as well as quite a drop from May’s 47.3.
However, due to June’s number still being under 50, the Eurozone manufacturing sector is still considered to be contracting, whereas a number over 50 would mean growth.
June was the 15th month in a row of contraction, mainly due to new orders, employment and export figures lagging. Several companies also faced more rising input costs, while selling prices were a little dampened.
Selling prices reduced at the slowest pace in 14 months. Sentiment amongst manufacturers was also considerably dampened when it came to the outlook for the next few months.
The HCOB Eurozone services PMI was also released on Friday morning, coming in at 52.6, a fall from May’s 53.2. This was the fifth consecutive month of growth, however, this was still the lowest figure in the last three months.
When it came to services, new business increased more quickly, however, export orders were still on the decline. Hiring was also robust, with selling prices and input costs on the rise as well. However, selling prices increased at the lowest level in more than three years. Business confidence plunged to the lowest level since January 2024.
Coming to the HCOB composite PMI, June’s figure dropped to 50.8, down from 52.2 in May, and quite a bit below analyst forecasts of 52.5. This was still, however, the fourth month in a row that growth was seen in private economic activity.
This was mainly due to the growth in the services sector, which, although on a smaller scale this month, was still enough to make up for the slowdown in manufacturing. On an aggregate basis, new orders fell for the first time in four months, mainly due to export demand lagging and companies going through backlogs more quickly.
Employment across the Eurozone manufacturing and services sectors also grew at the lowest rate since March 2024. Inflation for input costs was also at its lowest level in 2024.
Coming to the economic growth outlook for this year, the European Commission said in its Spring 2024 Economic Forecast, ‘Growth of economic activity this year and next is expected to be largely driven by a steady expansion of private consumption, as continued real wage and employment growth sustain an increase in real disposable incomes. A strong propensity to save is, however, still holding back private consumption.
“In contrast, investment growth appears to be softening. Dragged down by the negative cycle of residential construction, it is expected to pick up only gradually. While credit conditions are set to improve over the forecast horizon, markets now expect a slightly more gradual path of interest rate cuts compared to winter.”
