What does manufacturing data mean for Eurozone economy?

Eurozone manufacturing activity contracted in June due to faster contractions in output, new orders, and employment, according to the latest HCOB Purchasing Managers’ survey data by S&P Global.

The manufacturing Purchasing Managers’ Index (PMI) fell to 45.8 in June from May’s 14-month high of 47.3, suggesting a strong and accelerated deterioration in the manufacturing sector. Factory production contracted at the fastest pace in 2024 so far, with a sharper deterioration in demand conditions. Producers reported weaker sales to foreign clients, the steepest reduction since February.

Manufacturers reduced purchasing quantities amid shrinking production requirements, with the fall in buying levels being more pronounced than in May. Outstanding business decreased in June, extending the current sequence of depletion to just over two years.

Employment was reduced for a thirteenth straight month, and manufacturers reported a shortening of suppliers’ delivery times. Input costs increased for the first time in 16 months in June, while prices of goods leaving the factory gate continued to drop, albeit at a marginal pace.

Among the big-four economies, Germany’s manufacturing sector was again the worst-performer, with France reporting another strong deterioration in operating conditions. Italy’s manufacturing activity shrank at a slower pace, while Spain reported a slower growth. Germany experienced a fresh setback in June, with rates of contraction in both output and new orders accelerating after a substantial easing in May.