Euro-Zone Business Activity Revised Up to Stagnation

Euro area business activity in June was revised upwards to stagnation, indicating a halt in economic contraction. The HCOB Eurozone PMI, compiled by S&P Global, was adjusted to 50.0 from an initial estimate of 49.9. This figure represents the threshold between expansion and contraction in business activity. The upward revision suggests a more resilient economic performance than previously assessed for the month.

Manufacturing output in the euro zone experienced a decline for the 14th consecutive month in June, though the rate of contraction eased slightly. The HCOB Eurozone Manufacturing PMI registered 45.6, up from 45.0 in May. This indicates continued challenges within the manufacturing sector, but at a marginally slower pace of decline. New orders for manufactured goods also continued to fall, contributing to the subdued output.

Conversely, the services sector in the euro zone saw a return to growth in June. The HCOB Eurozone Services PMI increased to 51.2 from 50.5 in May, signaling a modest expansion. This growth was primarily driven by an increase in new business, which rose at the fastest pace since February. However, employment in the services sector saw a slight decrease, and input cost inflation remained elevated, posing potential headwinds for sustained growth.

Across the individual countries, Germany's economy continued to contract in June, with its HCOB Germany PMI at 47.5, down from 48.1 in May. France, however, saw its services sector expand, with the HCOB France Services PMI rising to 50.1 from 49.2. Spain's economy also showed signs of robust growth, with its HCOB Spain PMI reaching 54.5, driven by strong new orders and output in the services sector.