Euro PMI manufacturing declined to 51.9 in June from 52.2 in May. At the same time, the service PMI was lower at 52.8 in June from 53.2 in May. Consensus was for both figures to be almost unchanged - hence, the declines were a bit disappointing.
Nevertheless, both PMIs still suggest higher GDP growth in Q2 (around 0.4% q/q) versus Q1 when the economy grew 0.2% q/q.
The decline in manufacturing PMI followed after it peaked at 54.0 in January. In H1, the slowdown in global growth in Q1 had a negative impact on the manufacturing sector, but in June the new export orders index increased marginally to 52.7 suggesting export growth is about to stabilise. This should also have a positive impact on the new orders index, which declined to 52.0 in June from 52.9 in May. In line with that, the order-inventory balance is showing some signs of stabilisation although the signal is that it could take a while before PMI manufacturing starts to increase again.
For service PMIs, the underlying details were better than suggested by the headline figure as the future business expectations index increased to 62.8 from 60.7 while the incoming new business index increased to 53.3 in June from 52.9 in May. This indicates that domestic demand is still slowly improving although the service PMI declined a bit.
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