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Amended: Eurozone Private Sector Growth At 16-Month Low

eurozonepmi 042117 23jun22 lt

Corrected first para

The euro area private sector expanded at the slowest pace in more than a year in June as the manufacturing output contracted for the first time in two years and growth in the service sector eased sharply, preliminary data from S&P Global showed on Thursday.

The flash composite output index fell to a 16-month low of 51.9 in June from 54.8 in the previous month. The score was forecast to ease moderately to 54.0.

A reading above 50.0 indicates expansion in the sector. The latest score suggested that business activity grew for the sixteenth straight month but the pace of growth moderated for two consecutive months to its lowest in the current sequence of expansion.

The slowdown means the latest data signal a rate of GDP growth of just 0.2 percent at the end of the second quarter, down sharply from 0.6 percent at the end of the first quarter, with worse likely to come in the second half of the year, S&P Global Market Intelligence Chief Business Economist Chris Williamson, said.

The services Purchasing Managers' Index declined to 52.8, down from 56.1 in May and economists' forecast of 55.5.

Similarly, the manufacturing PMI slid to 52.0 in June from 54.6 a month ago. The reading was below the forecast of 53.9.

The survey showed that new orders for goods and services stagnated in June. Manufacturing output dropped for the first time in two years. With the steep loss of orders, factory output is set to decline at a faster pace in July, the survey showed.

Overall jobs growth moderated to a 13-month low in June as firms in both manufacturing and services scaled back their future expansion plans. Business expectations for the year ahead fell to the lowest since October 2020.

Average charges for goods and services rose sharply again in June. The rate of inflation eased further from April's all-time high to the lowest since February. And rates of selling price inflation cooled in both manufacturing and services.

Looking across the region, Germany reported the slowest expansion, with growth moderating sharply to the weakest since the marginal contraction seen last December.

At 51.3, the composite output index fell for the fourth month in a row to reach the lowest level since December last year. Economists had forecast the index to fall to 53.1 from 53.7 in May.

The services PMI eased to a five-month low of 52.4 in June from 55.0 in the previous month. The expected reading was 54.5. At the same time, the factory PMI fell more-than-expected to 52.0 from 54.8. The score was seen at 54.0.

While growth in France outpaced that of Germany, it nevertheless fell sharply to the slowest since January. France's composite output index came in at 52.8 versus 57.0 in May and well below economists' forecast of 56.0.

The manufacturing PMI declined to 51.0 from 54.6 in the previous month. The reading was expected to ease to 54.0. Likewise, the services index decreased to 54.4 from 58.3. The expected score was 57.6.

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