The Eurozone economy managed to find its footing in June, dodging a feared contraction to finish the month flat, according to finalised data from S&P Global. Analysts had previously braced for a downturn as the conflict in the Middle East drove up prices and tangled global supply chains. However, the composite purchasing managers’ index (PMI) bounced back from May’s contraction of 48.5 to land exactly at 50.0—the precise dividing line between growth and economic shrinkage, and a three-month high.
A stronger-than-expected performance in the service sector was the main driver behind the upward revision. While services shrank for the third straight month, the sector’s index rallied to 49.4 from May’s dismal 47.7, outperforming early estimates of 48.9. This softening decline in services, which represents the bulk of the Eurozone’s economic output, helped cushion the broader economy from further damage.
The stabilisation was further anchored by the manufacturing sector, which continued to expand. Final data showed factory growth dipping only slightly to 51.4 from May’s 51.6. Chris Williamson, Chief Economist at S&P Global Market Intelligence, noted that the easing pressure on services combined with resilient manufacturing means the wider economy has successfully stabilised after a two-month drop in production.
@anp | NEWS BRAINPORT
