Composite PMI edges up moderately in June
Leading indicators point to slightly improved dynamics in the Euro area’s economy in June, although momentum continued to diverge. In June, the Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, came in at 52.1 modestly up from May’s 51.8. Although the reading was a seven-month high, overall, it still marked one of the worst readings in the past five years. The PMI remains just above the 50-point threshold that distinguishes expanding business activity in the Eurozone.
The details of the release continue to point to a two-speed Eurozone economy. The services sector drove growth in June, with the services PMI hitting a seven-month high amid improved inflows of new work. However, the picture in the manufacturing sector is gloomier, with the manufacturing PMI pointing to another month of contracting activity. Manufacturing firms reported a steep drop in new orders in June. Meanwhile, the story in employment was similar with growth improving slightly thanks to a solid gain in service sector drops. On a downbeat note, expectations of growth deteriorated in both sectors, pointing to sour confidence.
Regarding the Eurozone’s two largest economies, the PMIs pointed to improved conditions in France, while Germany’s PMI was broadly unchanged. Elsewhere in the region activity softened.