Business exercise development in Europe slowed in June, pointing to a troublesome finish to the second quarter, in line with preliminary knowledge Friday.
The euro zone’s flash composite Purchasing Managers’ Index dropped to 50.3 in June from 52.8 within the earlier month. This was beneath the 52.5 anticipated by analysts. A studying above 50 marks an enlargement in exercise, whereas one beneath 50 marks a contraction.
“Eurozone business output growth came close to stalling in June, according to the latest HCOB flash PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival recorded in the spring,” S&P Global mentioned in a launch.
“Although energy and supply chain worries have eased since late last year, June has seen a further escalation of concerns over demand growth, and in particular the impact of higher interest rates, and the resulting possibilities of recessions both in domestic markets and further afield.”
Speaking to CNBC’s Street Signs Europe, Chris Williamson, chief enterprise economist at S&P Global Market Intelligence, described the numbers as “worrying.”
“Higher interest rates, the rise in the cost of living, all beginning to take their toll,” he mentioned.
The European Central Bank has been rising rates of interest constantly for the previous 12 months in an effort to deliver down inflation. Higher charges can result in larger prices for corporations throughout the bloc, nevertheless, and so usually develop into a drag on output.
Fresh PMI knowledge got here in beneath expectations and pointed to an financial slowdown.
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On a country-by-country foundation, knowledge earlier within the day from Germany additionally confirmed a slowdown in Europe’s largest economic system. The German flash composite PMIs fell to 50.8 in June from 53.9 in May. This was beneath market expectations.
“These data are consistent with our view that GDP (gross domestic product) growth in Germany will remain subdued in second and third quarters after the economy registered a technical recession,” Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, mentioned in a be aware to shoppers.
Germany entered a technical recession within the first quarter of the yr, after contracting 0.3% over the three-month interval. In the ultimate quarter of 2022, Germany’s economic system shrunk by 0.5%.
It was an identical story in France, the place the composite PMI sunk to 47.3 from 51.2 in May, properly beneath the 51 anticipated. This was primarily because of weak spot within the companies sector.
Euro zone bond yields prolonged their falls following knowledge, with the yield on the 2-year German bund dropping to three.17% in early commerce and the yield on the 10-year benchmark reducing to 2.36%. An financial slowdown tends to be unfavorable for bond yields.
Source web site: www.cnbc.com
