Preliminary data published by S&P Global showed that activity in the eurozone private sector continued to expand, but the growth rate slowed to its lowest level in 16 months amid declining demand. Meanwhile, business expectations for the coming year have fallen to the lowest level since October 2020.
The Eurozone PMI Composite Output Index fell to 51.9 points in June from 54.8 points in May. Despite the fall, the index remained above the 50-point mark, which indicates an expansion of activity in the sector.
According to the report, new orders for goods and services did not change compared to May, not increasing for the first time since March 2021. As for the situation in the manufacturing sector, output declined for the first time in two years, while a further drop is expected in July amid a sharp decline in new orders received during the month. New orders for goods recorded the second fall in a row, with the rate of decline being the most significant since May 2020. Meanwhile, the growth of business activity in the services sector slowed to the lowest level since January, and the growth rate of new orders slowed to the second lowest level since May 2021.
The data also showed that the pressure on the manufacturing sector continued to be exerted by supply shortages, often associated with the war in Ukraine and quarantine in China. However, the average delivery times of suppliers increased to the smallest extent since December 2020, which was due to a decrease in demand for resources in June.
Meanwhile, private sector employment growth slowed to a 13-month low in June, and business expectations for the coming year fell to the lowest level since October 2020. Expectations in the manufacturing sector deteriorated particularly markedly, falling to the lowest level since May 2020, but future expectations also fell in the service sector - to the lowest level since October 2020.