Financial News: Eurozone Manufacturing Activity Expands Moderately

Eurozone Manufacturing Activity Expands Moderately

(RTTNews) - The euro area manufacturing activity continued to grow in June as production expanded moderately and cost pressures softened but supply conditions remained a challenge, final survey data from S&P Global showed Wednesday.

The final manufacturing Purchasing Managers' Index dropped to a four-month low of 51.4 in June, down from 51.6 in the previous month. The score was slightly above the flash estimate of 51.3.

Nonetheless, manufacturing activity remained in the expansion territory for a fifth straight month in June.

"A further rise in manufacturing output in June adds to signs of encouraging resilience in the eurozone economy," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

"However, whether the better news out of the Middle East leads to a further improvement in the near-term performance of the manufacturing economy is not clear cut," Williamson.

Manufacturers reported another increase in production in June. New orders rose marginally after stagnating in May.

The volume of raw materials and semi-finished goods purchased by manufacturers declined in June. The use of pre-purchased materials allowed manufacturers to lessen the operational impact of supply-chain disruption. Further, there was a reduction in factory payroll numbers.

Regarding price pressures, the survey showed that input cost inflation declined in June to the lowest since March. At the same time, output charge inflation eased to a three-month low.

Business confidence improved after slumping to a 17-month low in April. However, expectations for the year-ahead remained slightly below their historical trend.

Among big-four economies, Germany's manufacturing activity logged a meagre growth in June. There was a modest rise in output, supported by a slight uptick in demand. The manufacturing PMI rose to 50.3 from 50.1 in May and remained above the flash score of 50.0.

France's manufacturing activity recovered in June with slower declines in output and new orders. The factory PMI posted 51.2 in June, up from 49.7 in the prior month and flash reading of 50.7.

Italy's manufacturing activity growth moderated in June but remained one of the strongest in over four years. The factory PMI slid to 52.2 from 52.9 a month ago.

On the other hand, Spain's manufacturing sector contracted in June as new orders fell at a marked pace and production dropped for the first time in three months. The factory PMI registered 49.7 compared to 51.2 in May.

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