Eurozone June flash services PMI 50.0 vs 50.0 expected | Forexlive
- Prior 49.7
- Manufacturing PMI 49.4 vs 49.8 expected
- Prior 49.4
- Composite PMI 50.2 vs 50.5 expected
- Prior 50.2
Services activity in the euro area is back to flat levels with overall business activity continuing to hold near stagnation territory. It points to some stabilisation but nothing that really hints at an uptrend or major turnaround in sentiment yet. New orders continued to fall but at least at its slowest pace in a year. Meanwhile, business confidence is seen picking up as tariff fears ease so that’s a positive. HCOB notes that:
“The eurozone economy is struggling to gain momentum. For six months now, growth has been minimal, with activity in the
service sector stagnating and manufacturing output rising only moderately. In Germany, there are signs of a cautious
improvement in the situation, but France continues to drag its feet. The momentum evident in the official growth figure of 0.6
percent for the first quarter is unlikely to have carried over into the second quarter, especially since special factors such as
Ireland’s unusual jump in growth inflated this figure. However, there is no reason to be resigned, as the outlook has
brightened according to the survey and companies are keeping employment roughly constant.
Delivery times increased in June. Given the weak order situation and only moderate growth in production, this may be
related, among other things, to the new geopolitical crises and the variable tariff policy of the US. Both factors are making
supply chain management more difficult. Overall, however, the delivery time indicator shows that most companies are
relatively good at adapting to uncertainty and that there have been no major disruptions so far.
For the ECB, the price environment for services remains slightly tense. Companies are still facing quite significant cost
increases and raised their selling prices slightly more in June than in the previous month. This higher inflation in the service
sector is partly offset by a deflationary environment in the goods sector. However, energy prices play an important role here.
Until recently, they were still falling, but have risen sharply since the conflict between Israel and Iran. This information has
only been partially reflected in the surveys. Overall, however, the ECB can remain relatively calm, as the strong euro and the
deflationary effect of US tariffs argue against a short-term rise in inflation.”
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