Eurozone: PMI picks up in June
June 22, 2018
Leading data suggests that the Euro area’s economic momentum gained steam in June. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, rose from 54.1 in May to 54.8 in June, ending the indicator’s downward fall seen since January. While the result overshot expectations of a dip to 53.9, the reading is still downbeat compared to recent data and the second quarter average of the PMI was the weakest since Q4 2016. However, the composite PMI lies well above the 50-threshold, signaling expanding business activity in the Eurozone.
June’s rise was driven by improving activity in the services sector, while survey data for the manufacturing sector stayed downbeat. Services sector growth rose to a four-month high, however, manufacturing output expanded at the slowest pace since February. Meanwhile, firms added jobs in both sectors, while inflationary pressures were high in June amid higher fuel costs.
Regarding the two largest Eurozone economies, the composite PMIs rose slightly in France and Germany, thanks to stronger performances in the services sectors. Elsewhere in the region, business conditions also picked up.
Eurozone GDP Forecast
FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 2.3% in 2018, which is unchanged from last month’s forecast. For 2019, panelists expect the economy to grow 2.0%.