European countries manufacturing sector remains in expansion for June according to the latest S&P Global PMI™ data with most beating expectations. The eurozone saw output decline, however. The euro area and the UK were some of the larger manufacturing economies to see new business decline. Business optimism in most areas dipped to a two-year low, inflationary pressure remained elevated and supply chains also stayed stretched.
The S&P Global Eurozone Manufacturing PMI® fell from 54.6 in May to 52.1 in June, its lowest reading since August 2020 and a fifth consecutive month of decline in the headline measure. In the UK output growth slows to near-stagnation pace as new order intakes fall for the first time since January 2021.
Europe and UK Manufacturing PMI June 2022
- Eurozone’s June Manufacturing PMI 52.1 (expected 52.0; last 54.6)
- Germany’s June Manufacturing PMI 52.0, as expected (last 54.8)
- U.K.’s June Manufacturing PMI 52.8 (expected 53.4; last 54.6)
- France’s June Manufacturing PMI 51.4 (expected 51.0; last 54.6)
- Italy’s June Manufacturing PMI 50.9 (expected 50.5; last 51.9)
- Spain’s June Manufacturing PMI 52.6 (expected 52.1; last 53.8)
- Swiss June procure.ch PMI 59.1 (expected 57.9; last 60.0)
Comments on Europe
Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“Eurozone manufacturing has moved into decline in June, with production dropping for the first time for two years amid a steepening downturn in demand. Orders for goods have fallen at an accelerating rate over the past two months, dropping in June in every country surveyed with the exception of the Netherlands, and even here the rate of growth has weakened markedly in recent months.
“Demand is now weakening as firms report customers to be growing more cautious in relation to spending due to rising prices and the uncertain economic outlook.
“The downturn looks set to gain momentum in coming months. Inventories of both raw materials and unsold stock are rising due to lower than expected production and sales volumes respectively, hinting that an inventory correction will act as an additional drag on the sector in coming months. Backlogs of work are meanwhile falling, which is often a prelude to firms reducing operating capacity, and business confidence in the outlook has fallen to the gloomiest for just over two years.
“Supply for many important inputs also remains constrained, and concerns over energy and food supply
have added to nervousness about the future.
“One upside to the recent weakening of demand is an alleviation of some supply chain constraints, which has in turn helped cool inflationary pressures for industrial goods. With the survey data indicating an increasing likelihood of the manufacturing sector slipping into a recession, these price pressures should ease further in the third quarter.”
About the Report
The Global Report on Manufacturing is compiled by IHS Markit based on the results of surveys covering over 13,500 purchasing executives in over 40 countries. Together these countries account for an estimated 98% of global manufacturing output2 . Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.
Source: IHS Markit Procure
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