Eurozone Private Sector Growth Weakens In June

(RTTNews) - The eurozone private sector expanded at a slower pace in June as the manufacturing production logged its first fall in two years on one side and the weaker growth in services activity on the other, final survey results from S&P Global showed on Tuesday.

The final composite output index fell to 52.0 in June from 54.8 in the previous month. The reading was slightly above the initial estimate of 51.9.

The score signaled the slowest pace of expansion in the current 16-month sequence of growth.

The services Purchasing Managers' Index dropped to 53.0 in June from 56.1 in May. The flash score was 52.8. Although the reading signaled the weakest growth since January, the sector sustained its upturn.

The sharp deterioration in the rate of growth of eurozone business activity raises the risk of the region slipping into economic decline in the third quarter, Chris Williamson, chief business economist at S&P Global Market Intelligence said.

The June PMI reading is indicative of quarterly GDP growth moderating to just 0.2 percent, Williamson noted.

The new workflow stalled in June, ending a 15-month sequence of growth. Nonetheless, firms continued to struggle with capacity pressures, as backlogs of work rose again. Firms added more staff at a sharp pace in June.

Turning to prices, data highlighted further severe inflationary pressures. Cost pressures rose steeply in June but remained below March's peak. Consequently, charges levied by companies rose further. Nonetheless, the rate of inflation eased to a four-month low.

Business confidence was the weakest since October 2020 and remained subdued in the context of historical data. Among big-four economies, Spain registered the fastest expansion in June, while Italy and Germany were tied at the bottom end of the growth rankings, with the latest upturns only marginal. France logged its weakest expansion in more than a year. The German private sector lost more growth momentum in June. The S&P Global/BME final composite output index ticked down to 51.3 in June, in line with estimate, from 53.7 in May. The latest score was the lowest since the fractional contraction seen last December.

The services PMI came in at a five-month low of 52.4 in June versus 55.0 in May. The final score matched the flash estimate.

France's private sector expanded at the slowest pace in 14 months in June. The final composite output index registered 52.5 in June, well down from 57.0 in May and the flash score of 52.8.

The services PMI slid to 53.9 in June from 58.3 in May. The flash reading was 54.4.

Italy's composite output index declined to 51.3 in June from 52.4 in May. Output rose at the slowest pace since January. The services PMI posted 51.6 in June, down from 53.7 in May and economists' forecast of 51.5. Slower growth across Spain's manufacturing and services sectors signaled the weakest expansion in the private sector in three months. The composite index dropped to 53.6 in June from 55.7 in May.

At 54.0, the services PMI fell from 56.5 in the previous month. The score was forecast to fall to 53.5.