Eurozone Manufacturing Growth Weakest In Nearly 2 Years

The eurozone manufacturing activity grew at the weakest pace in nearly two years in June on weaker production and new orders, final data from S&P Global showed Friday.

The manufacturing Purchasing Managers’ Index fell to a 22-month low of 52.1 in June from 54.6 in May. The flash score was 52.0.

The headline figure dropped for the fifth consecutive month in June. However, a score above 50.0 indicates expansion.

The survey showed that production declined for the first time in two years in June due to weaker demand conditions, the war in Ukraine and persistent supply issues.

At the same time, the decline in new orders deepened as clients were reluctant to place new orders at current price levels. Export orders also declined in June.

Backlogs of work, which have been built up significantly throughout the pandemic, fell for the first time in almost two years. Employment growth slowed to a three-month low in June.

Business sentiment fell to its weakest level since May 2020 as concerns surrounding the global economic outlook and inflation weighed on growth expectations.

There was also a softening of inflationary pressures as both input costs and output prices rose at slower rates.

With the survey data indicating an increasing likelihood of the manufacturing sector slipping into a recession, these price pressures should ease further in the third quarter, Chris Williamson, chief business economist at S&P Global Market Intelligence said.

Among major member countries, Germany’s manufacturing sector registered its slowest expansion in almost two years in June. The manufacturing PMI fell to 52.0, as initially estimated, from 54.8 in May.

France manufacturing activity grew at the slowest pace in 18 months in June. The final PMI fell to 51.4 from 54.6 in May. However, the score was above the flash 51.0.

The weakest-performing nation was Italy, which registered its softest upturn in two years. The manufacturing PMI declined to 50.9 from 51.9 in the previous month. The score was forecast to fall to 50.5.

Spain’s manufacturing sector continued to expand in June, but at its slowest rate in nearly a year-and-a-half. The manufacturing PMI came in at 52.6 versus 53.8 in May. The expected score was 52.1.

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