Key facts
- Germany's private sector contracted at its fastest pace in 18 months in June.
- The Composite Flash Eurozone PMI rose to 49.5 in June, indicating a slower contraction.
- Services sector activity in Germany saw its sharpest drop in 18 months.
- Input cost inflation in the Eurozone eased to its slowest pace since February.
- Eurozone manufacturing output continued to expand.
- Business confidence in the Eurozone improved for the second consecutive month.
Germany's private sector activity contracted at its fastest pace in 18 months in June, with services leading the decline. However, the broader Eurozone private sector activity shrank for a third consecutive month at a slower pace, reaching a three-month high of 49.5 in June, according to the S&P Global Flash Eurozone Composite PMI. This figure, while still below the 50.0 mark signaling contraction, showed resilience.
The modest recovery in tourism and leisure demand in the Eurozone was not enough to fully offset a sustained fall in new business across the bloc. While manufacturing new orders saw a marginal recovery, this was insufficient to counteract a continued decline in services demand. Germany's services sector experienced its sharpest drop in business activity in 18 months, while France's rate of decline eased.
Encouragingly, inflationary pressures showed signs of easing. Input cost inflation in the Eurozone rose at its slowest pace since just before the outbreak of war in the Middle East in February, with output price inflation also slowing. The Flash Eurozone Manufacturing PMI dipped slightly to a four-month low of 51.3, though factory output continued to expand. Business confidence improved for a second consecutive month, though overall sentiment remained subdued.