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Eurozone Manufacturing Activity Deteriorates In June

Euro area manufacturing activity contracted in June amid faster contractions in output, new orders and employment, the latest HCOB Purchasing Managers’ survey data compiled by S&P Global showed on Monday.

The manufacturing Purchasing Managers’ Index, or PMI, fell to 45.8 in June from May’s 14-month high of 47.3. The flash score was 45.6.

A reading below 50.0 indicates contraction. The latest score suggested a strong and accelerated deterioration in the manufacturing sector.

Factory production contracted at the fastest pace in 2024 so far. There was a sharper deterioration in demand conditions. Producers reported weaker sales to foreign clients and the reduction was the steepest since February.

Manufacturers reduced purchasing quantities amid shrinking production requirements. The fall in buying levels was more pronounced than in May. Stocks of purchases continued to be depleted, as has been the case in each month since early 2023.

Outstanding business decreased in June, extending the current sequence of depletion to just over two years. Employment was reduced for a thirteenth straight month. Manufacturers reported a shortening of suppliers’ delivery times in June.

Input costs increased for the first time in 16 months in June. Meanwhile, prices of goods leaving the factory gate continued to drop, albeit at a marginal pace.

Business sentiment was unchanged from a 27-month high level reported in May. Firms were optimistic towards the forthcoming year.

Among the big-four economies, Germany’s manufacturing sector was again the worst-performer. France also reported another strong deterioration in operating conditions. At the same time, Italy’s manufacturing activity shrank at a slower pace, while Spain reported a slower growth.

Germany’s manufacturing sector experienced a fresh setback in June with rates of contraction in both output and new orders accelerating after a substantial easing in May. The factory PMI came in at 43.5 in June, down from a four-month high of 45.4. The reading was slightly above the flash 43.4.

France’s manufacturing output dropped the most since January. The final factory PMI posted 45.4 in June, down from 46.4 in May but above the preliminary score of 45.3.

Italy’s manufacturing activity contracted again in June, marking a third consecutive fall as weakening demand conditions led firms to reduce their production. The manufacturing PMI rose slightly to 45.7 in June from 45.6 in the previous month.

Spain’s manufacturing economy continued to grow but at a more moderate pace in June. The factory PMI slipped to 52.3 in June from 54.0 in May.

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