Eurozone PMI data for June showed a significant decline, with the manufacturing PMI falling to 45.6 from 47.3, below the forecast of 45.6. The services PMI also fell to 52.6 from 53.2, below the forecast of 53.5. As a result, the composite PMI fell to 48.0 from 52.2.
Cyrus de la Rubia, chief economist at Hamburg Merkbank, noted that the preliminary HCOB flash euro area composite production index showed a slight downward revision in second-quarter GDP growth, but still showed positive growth of 0.2 percentage points compared to the first quarter.
The ECB's June rate cut may be justified by easing price pressures in the services sector, he added. However, the PMI data do not support a further rate cut in July. In Germany, service providers have increased their prices more sharply than in May. Moreover, the manufacturing sector, which had faced deflation in production costs for 14 months, saw input prices rise in June for the first time since February 2023.
He also noted that the downturn in France's services and manufacturing sectors may be linked to the results of the recent European Parliament elections and President Macron's announcement of early elections on June 30. This uncertainty has likely caused many companies to pause new investments and orders, contributing to the euro zone's economic downturn.
German manufacturing PMI fell to 43.4 from 45.4. Services PMI fell to 53.5 from 54.2. Composite PMI fell to 50.6 from 52.4. French manufacturing PMI fell to 45.3 from 46.4. Services PMI fell to 48.8 from 49.3. Composite PMI fell to 48.2 from 48.9.
See the full Eurozone PMI report here.
