eurozone PMI
  • Prelim was 52.8
  • Prior was 56.1
  • Composite PMI 52.0 vs 51.9 prelim

This is a 16-month low, though still comfortably above 50.0, however the sharp decline is worrisome.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The sharp deterioration in the rate of growth of eurozone business activity raises the risk of the region slipping into economic decline in the third quarter. The June PMI reading is indicative of quarterly GDP growth moderating to just 0.2%, with forward-looking indicators such as the survey’s new orders and business expectations gauges pointing to falling output in coming months.

“The manufacturing sector is already in decline, for the first time in two years, and the service sector has suffered a marked loss of growth momentum amid the cost of living crisis. Household spending on non-essential goods and services has come under particular pressure due to soaring prices but business spending and investment is also waning in response to the gloomier outlook and tightening financial conditions.

“While employment growth remained robust in June, the downshifting in the pace of demand growth and deterioration in business optimism points to the labour market also cooling in the coming months.

“More encouragingly, although price pressures remain elevated, there are signs that inflationary forces peaked back in April, reflecting a marked cooling of industrial price growth, improving supply chains and diminished demand. However, energy and food supply will likely remain two particular areas of concern and potential inflationary pressures as long as the war in Ukraine continues.

“The June PMI data therefore suggest that risks have increasingly tilted towards the economy slipping into a downturn at the same time that inflationary pressures moderate but remain elevated.”