Euro area: Final PMI confirms cyclical recovery underway

Research evidence excerpt

Euro area: Final PMI confirms cyclical recovery underway

J P M O R G A N Europe Economic Research

03 July 2026

Euro area: Final PMI confirms

cyclical recovery underway

The final June composite PMI confirms that a cyclical recovery is already Economic and Policy Research

underway as drags linked to the conflict in the Middle East continue to fade. The Mariana Monteiro

final reading was revised up by 0.5pt to 50.0 (+1.4pts versus May), consistent with (44 20) 3493-5147

growth running at roughly 0.8%ar on an ex-Ireland basis. Taken together with the mariana.reispaivamonteiro@jpmorgan.com

prior two months’ data, the PMI survey suggests the euro area grew at a 0.5%ar J.P. Morgan Securities plc

pace in 2Q—in line with our upwardly revised forecast. In our view, this

underscores the region’s continued ability to absorb shocks — though these

developments have also been supported by a benign international backdrop.

Financial conditions tightened slightly over the quarter as borrowing costs edged

higher, but firms’ borrowing and employment picked up—suggesting that

companies continued to increase spending despite elevated uncertainty and the

margin squeeze caused by higher input costs. Household loan demand also

remained steady, and consumption likely continued to be smoothed: we expect

consumption to have grown modestly (0.25%ar) despite a significant shock to real

incomes. At the same time, survey-based price indicators—while still elevated—

have started to moderate.

Some reasons for caution remain. The situation in the Middle East is far from

settled, and both future expectations and hiring intentions remain at historically

low levels. That said, these forward-looking indicators have already begun to

improve as well.