European Economic Comment: Eurozone: PMIs pick-up amid energy relief

Research evidence excerpt

European Economic Comment: Eurozone: PMIs pick-up amid energy relief

e print brings the Q2

average to 48.9, below the Q1 average of 51.3, signalling not only a slowdown in

activity but also a risk of a contraction and indicating downside risk to our estimate of

+0.2% q/q (out on 30 July). That said, hard data available so far paints a less negative

picture than the PMIs - in the Eurozone and globally.

Country detail: Decline in Germany, partial recovery in France

The German flash Composite PMI declined in June by 0.8 points to an 18-month low of

48.0, well below consensus (49.7). While the Manufacturing PMI fell only marginally by

0.1 points to 50.0, the Services PMI declined more notably by 1.3 points to 46.8, a 43-

month low. Both current output and new orders declined in services but were up

manufacturing. According to the press release, "deteriorating economic conditions and

market uncertainty" are behind the ongoing decline in the services sector. Meanwhile,

the French Composite PMI rose 2.7 points to 47.6 in June, ahead of consensus for 46.0.

This comes after last month's sudden slump, which has been reversed by today's

increase but with the latest reading still 2.3 points below the pre-Middle East conflict

level. The improvement was primarily driven by a 3.1 point increase in the Services PMI

to 47.4, but the Manufacturing PMI also rose (+1 point to 50.7). Both current output

and new orders rose in June but remain in contraction territory. The press release notes

"some reprieve" but also still "overstocked clients, subdued market conditions and

customers showing hesitancy to commit to new projects".

UK PMIs surprisingly fall again in June

The UK Composite PMI fell for the second consecutive month in June (-0.3 to 49.4;

consensus: 50.1).