Severe Downturn In Eurozone Manufacturing Eases


The severe downturn in the euro area manufacturing sector continued to ease in June amid easing of restrictions related to coronavirus pandemic, final survey data from IHS Markit showed Wednesday.

The final factory Purchasing Managers’ Index rose to a four-month high of 47.4 in June from 39.4 in May and improved from a flash reading of 46.9.

Nonetheless, the reading was below the neutral 50 for 17 successive months, suggesting contraction.

The final PMI numbers for June add further to signs that the Eurozone factories are seeing a strong initial recovery as the economy lifts from Covid-19 lockdowns, Chris Williamson, chief business economist at IHS Markit said.

The rise in the June survey is indicative of output falling at an annual rate of just 2 percent, the economist noted.

Manufacturing output dropped only moderately in June and new orders fell at the weakest pace in four months. Nonetheless, export sales declined at a noticeable pace.

Due to lack of workloads, firms reduced staffing in June. Employment decreased for the fourteenth straight month.

Latest prices data indicated that deflationary pressures remained apparent across the sector. Input costs decreased for a thirteenth month and output prices extended the current period of deflation to a year.

Finally, confidence about production in the year ahead returned to positive territory in June, and reached its highest level in four months.

All member countries of the currency bloc recorded a relative improvement in their PMI readings in June. France posted PMI level above 50.0, with the best growth for 21 months.

Spain moved closer to stabilization, followed by Italy. Meanwhile, Germany continued to lag the rest of the region.

After three months of sharp deterioration, France manufacturing sector strengthened notably in June. The manufacturing PMI advanced to 52.3 from 40.6 in May. This was above the flash 52.1.

The severe downturn in the Germany’s manufacturing sector also showed further signs of easing in June. The final Markit/BME factory PMI came in at 45.2, up from 36.6 a month ago and also above flash 44.6.

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