Economic growth softens in Eurozone - PMI

3rd Jul 2024 10:38

(Sharecast News) - Growth in the Eurozone softened in June, a closely-watched survey showed on Wednesday, as a resurgent services sector failed to offset the slump in manufacturing.

The final HCOB Eurozone services PMI business activity index was 52.8, revised up from the flash reading of 52.6.

It means the service sector is continuing to grow, although the figure was down on May's 53.2 and a three-month low.

However, when combined with previously released data on the struggling manufacturing sector, the composite index fell sharply.

The HCOB Eurozone composite PMI output index was 50.9, still above the neutral 50.0 level but down on May's 52.2.

The HCOB Eurozone Manufacturing PMI output index, released earlier this week, slid to 46.1 from 49.3.

A balance above 50 indicates growth, while one below it suggests contraction.

Respondents said demand had softened for the first time since February in June, with weaker sales seen especially across non-domestic markets.

Input costs and output prices did cool, however, to five- and eight-month respective lows, although they remain above pre-pandemic trends.

Among individual countries, Spain's composite PMI output index was 55.8 and in Italy it was 51.3. But in France it was 48.8.

In manufacturing-reliant Germany, the bloc's biggest economy, the composite index was 50.4, just below the flash reading of 50.6.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "Growth in the Eurozone can be attributed fully to the service sector.

"The sector, in our opinion, is supported by the high number of tourists. According to private statistics, arrivals of travellers to Europe...increased by 7.2% in the first quarter and is now above the pre-Covid-19 level. In Germany, tourism is getting an additional boost from the European Football Championship.

"For the next few months, tourism is likely to remain an important growth factor for the Eurozone."