- Prior 56.1
- Manufacturing PMI 52.0 vs 53.9 expected
- Prior 54.6
- Composite PMI 51.9 vs 54.0 expected
- Prior 54.8
Euro area growth slows to a 16-month low as demand conditions stall as the economy feels the pinch of the inflation surge. The details reveal that both the stagnation of demand and worsening outlook were widely blamed on the rising cost of living, tighter financial conditions and concerns over energy and supply chains. S&P Global notes that:
“Eurozone economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost of living shock and slumping business and consumer confidence.
“Excluding pandemic lockdown months, June’s slowdown was the most abrupt recorded by the survey since the height of the global financial crisis in November 2008.
“The slowdown means the latest data signal a rate of GDP growth of just 0.2% at the end of the second quarter, down sharply from 0.6% at the end of the first quarter, with worse likely to come in the second half of the year. Inflows of new business have stalled, led by a slump in demand for goods and reduced demand for services from cash-strapped consumers in particular.
“At the same time, business confidence has fallen sharply to a level rarely seen prior to the pandemic since the region’s economic contraction during the 2012, hinting at an imminent downturn unless demand revives.
“Rising levels of unsold stocks meanwhile mean the manufacturing sector will likely seek to reduce capacity in coming months which, alongside the deteriorating picture in the service sector and drop in confidence, will inevitably hit jobs growth.
“Persistent inflationary pressures add to the woes. The survey’s price gauges, which correctly anticipated the recent surge in inflation, remain elevated at levels not seen in the history of the eurozone prior to the pandemic, with a worrying increase in costs growth in the service sector. However, the recent cooling of demand is already showing signs of calming goods prices, bringing a tentative hint of a peaking of inflation in the near future.”