Financial News: Eurozone Private Sector Stabilizes In June

Eurozone Private Sector Stabilizes In June

(RTTNews) - The euro area private sector stabilized in June after two months of moderate decline, final purchasing managers' survey results published by S&P Global showed Friday.

The composite output index registered 50.0 in June compared to 48.5 in May. The flash score was 49.5.

The stabilization reflects growth in manufacturing being offset by a further fall in services.

The final services PMI rose to 49.4 from 47.7 in the previous month. The score was initially estimated at 48.9. Still a score below 50.0 indicates contraction in the private sector.

"A key drag on economic growth since the outbreak of the war in the Middle East has been the subduing of demand from consumers due to the energy price spike, but these inflationary pressures have shown signs of cooling markedly in June," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

Despite further reduction in demand, private sector activity stabilized in June. The survey showed that companies made further inroads into their backlogs of work. Employment was virtually unchanged in June.

Business confidence improved in June, taking it further above April's recent low. Growth expectations for the coming twelve months were their most optimistic since the outbreak of war in the Middle East.

Regarding prices, the survey showed that input prices increased sharply and at a pace that was above the historical trend. That said, the rate of increase was the weakest in four months. Subsequently, output charges were raised by the smallest margin since March.

Sharper expansions in Italy, Spain and Ireland helped to lift the Eurozone economy out of its downturn.

Germany's private sector contracted in June, reflecting the weakness in the service sector as the manufacturing posted an increase in production. The composite output index fell to 49.5 from 48.8 in the prior month. The reading was above the flash 48.0.

The services PMI came in at 48.6 in June, up from 48.1 in May. However, this was the highest score in the current three-month sequence of contraction and well above the initial estimate of 46.8.

Although French private sector activity improved from May, the sector remained in the contraction territory for the sixth straight month. The composite output index posted 47.2, down from May's 28-month low of 44.9 and the initial estimate of 47.6. The services PMI climbed to 46.8 in June from 44.3 in the previous month. The flash score was 47.4.

Italy's private sector expansion becomes broad-based in June. The composite output index registered 50.8 in June, up from 50.4 in the previous month. The services PMI ticked above the neutral threshold of 50.2 in June, up from 49.4 in May.

Spain's private sector logged a stronger growth in June driven by the service sector as manufacturing output declined for the first time in three months. The composite output index rose to 53.3 from 50.2 in May. The services PMI hit 54.2, up from 50.1 in the previous month.

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