Eurozone Private Sector Activity Rebounds In June

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Eurozone private sector activity rebounded in June, as businesses reopened despite challenging economic conditions posed by the coronavirus pandemic, final data from IHS Markit showed Friday.

The final composite output index climbed to 48.5 in June from 31.9 in the previous month. The flash score was 47.5.

Both manufacturing output and service sector activity continued to fall in June. The services PMI came in at a four-month high of 48.3 versus 30.5 a month ago and the flash estimate of 47.3.

"Having sunk to an unprecedented low in April amid widespread business closures to fight the virus outbreak, the PMI has risen to a level indicative of GDP contracting at a quarterly rate of just 0.2 percent, suggestive of strong monthly GDP gains in both May and June," Chris Williamson, chief business economist at IHS Markit said.

Incoming new business continued to fall but at a slower pace, reflecting weak demand both at home and abroad.

Companies continued to reduce staffing for the fourth straight month. Backlogs of work decreased for a sixteenth consecutive month but at a much slower rate.

On price front, the survey showed that falling input prices for manufacturers were offset by higher employment expenses for service providers. Due to challenging business environment, companies reduced their output charges.

Confidence amongst private sector companies returned to positive territory in June and hit its highest level for four months.

Country level data showed that all countries enjoyed their best composite PMI readings since February. France was the best-performing country overall. Spain moved close to stabilization, but activity continued to fall at solid rates in Italy and Germany.

Nonetheless, Germany's economy showed more signs of having turned a corner in June, following a record contraction in activity at the start of the second quarter. The composite PMI advanced to 47.0 from 32.3 in May. The flash score was 45.8.

Likewise, the services PMI improved to 47.3 from 32.6 in May. This was above the flash 45.8.

France's private sector logged its first growth in four months, following severe coronavirus lockdown restrictions.

At 51.7, the final composite output index rose from 32.1 in May and was above the flash 51.3. Likewise, the services PMI climbed to 50.7 from 31.1 in May. The flash score was 50.3.

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