The euro zone's nascent economic recovery unexpectedly slowed in June, weighed down by weakness in manufacturing, official data released on Friday showed.
flash H.C.O.B. The composite PMI production index came in at 50.8 in June, down from 52.2 in May and well below the 52.5 forecast, and the lowest level in three months.
Among them, the services PMI business activity index fell to 52.6 from 53.2, below the forecast of 53.5, while the manufacturing PMI fell to a six-month low of 45.6 from 47.3 in May.
Analysts had expected the manufacturing PMI to rise slightly to 47.9.
The manufacturing PMI production index also fell to 46.0 from 49.3, the lowest level in six months.
Overall, new orders fell for the first time in four months and business confidence fell to its lowest since February from a 27-month high in May, but input cost and output price inflation continued to ease.
Germany, the European Union's largest economy, saw business activity grow for the third consecutive month, but the rate of expansion slowed and new orders fell.
Germany's composite PMI came in at 50.6, well below the expected 52.7, while France's fell to 48.2. Analysts had expected 49.4.
“Is the manufacturing recovery over before it even began? We and the market consensus had expected the index to rise again in June after May's gains,” said Cyrus de la Rubia, chief economist at Hamburg Merkbank.
“The services sector continues to support the euro area. Activity did not recover as much as last month and fell short of most analysts' expectations, but overall expansion remained solid.”
Bert Collin, Senior Eurozone Economist ING“The decline in the June PMI suggests that second-quarter growth may be slower than initially expected,” it said.
“With price pressures easing, this supports our view of a benign economic environment in line with expectations of very cautious monetary easing from the European Central Bank. The euro area economy is poised for stronger growth than in 2023, but headwinds remain.”
A reading above 50 indicates growth, while a reading below 50 indicates contraction.
Data was collected between June 12th and 19th.
