The final Eurozone PMI Manufacturing reading for June marked a further descent to 43.4, compared to May’s 44.8 – a slump to a low not seen in 37 months. The PMI Manufacturing Output Index also ended lower at 44.2, an 8-month low from May’s 46.4.
The decline wasn’t restricted to a single nation, but spread across several member states, demonstrating widespread economic pressure. Greece was a rare positive outlier, reaching a two-month high at 51.8. In contrast, Spain slid to a 6-month low at 48.0, while Ireland plummeted to a 37-month low at 47.3. France achieved a slight uptick to a 3-month high of 46.0, while Netherlands, Italy, and Germany dipped to 37- and 38-month lows. Austria reached the lowest level, falling to a 38-month low at 39.0.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, articulated the stark economic picture: “Eurozone manufacturing production contracted for the third month in a row in June…with the rate of decline accelerating, pointing to a worsening of factory conditions.”
He also pointed to the negative reaction of the capital-intensive industrial sector to the ECB’s interest rate hikes. For the first time since January 2021, surveyed companies reported a reduction in their headcount. Additionally, purchasing activity declined at one of the most severe rates on record. As demand weakened and costs deflated rapidly, companies cut their sales prices for the second consecutive month.
On a slightly brighter note, de la Rubia noted the continued normalization of delivery times since February, but cautioned that material shortages remain a persisting issue.
