Eurozone activity slows in June, weighed down by France, according to PMI

Eurozone activity slows in June, weighed down by France, according to PMI
Eurozone activity slows in June, weighed down by France, according to PMI


The growth of private sector activity in the euro zone has slowed substantially during the month of June, according to advance data from the composite purchasing managers’ index (PMI), which has fallen to 50.8 points from 52.2 of the previous month, thus registering its worst reading in three months.

The slowdown in the growth of commercial activity observed in June was due to a less intense expansion in the services sector and a more pronounced reduction in manufacturing production, which had its biggest drop so far this year.

Specifically, the PMI for the services sector slowed its expansion in June to 52.6 points from 53.2 the previous month, a three-month low, while the manufacturing PMI fell to 45.6 points, compared to 47. May 3, its lowest in six months.

Likewise, the geographical analysis of the euro zone reveals that Germany saw a slight increase in total activity in June, while the rest of the euro zone continued to indicate solid expansion, while France saw a less positive result, since a decrease in total activity was recorded for the second consecutive month.

This “setback” in the economic recovery of the euro zone at the end of the second quarter reflects the first drop in new orders in four months, which translated into more moderate expansions in business activity and employment, while confidence business fell to its lowest since February.

For its part, the inflation rates of prices paid and prices charged attenuated to their lowest levels in six and eight months, respectively.

“The ECB, which cut interest rates in June, may feel justified by the price data, which indicated an easing of pressure on the euro zone services sector,” said Cyrus de la Rubia, chief economist. of Hamburg Commercial Bank, for whom, however, the reading of the HCOB PMI index does not provide arguments for another rate cut by the ECB in July.

Regarding the situation of economic deterioration in France, the expert considers that it can be linked to the results of the recent elections in the European Parliament and to the announcement of early elections for June 30, which has generated great uncertainty around the future economic policies.

“In any case, it is evident that France’s weak economic performance has contributed significantly to the deterioration of economic conditions in the euro zone,” he added.

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