Eurozone manufacturing reported its weakest expansion for one-and-a-half years in June, with risks clearly tilted towards output growth waning further in coming months.
Production growth has weakened markedly since the end of last year, and new order inflows have slowed even more. The final IHS Markit
Eurozone Manufacturing Purchasing Managers’ Index (PMI) posted an 18-month low of 54.9 in June, down from 55.5 in May and the earlier flash estimate of 55.0.
The PMI has signalled a weakening in the pace of expansion in each month since the turn of the year, as manufacturers have experienced a synchronised easing in growth of both production and new order volumes. PMI readings moved lower in five of the nations covered by the survey, including the two best performers (Netherlands and Austria). Weaker expansions were also seen in Germany, France and Greece, with France dropping to the bottom of the growth league table.
The biggest concern is the extent to which export order book growth has cooled since the start of the year, and could soon go into decline. The survey reveals mounting worries from companies relating to the impact of tariffs and trade wars, suggesting firms are bracing themselves for the potential for further export losses. Not surprisingly, business expectations for future production deteriorated in June to the lowest November 2015.
At the same time there are signs that political uncertainty is also dampening business spirits, most evidently in Italy, which was consequently the second-worst performer of all countries surveyed in June ahead of France.
Source: Markit economics, https://www.markiteconomics.com