Eurozone factories recorded ongoing expansion in June, capping the region’s strongest manufacturing quarter since early 2022. Easing input cost pressures provided relief, although subdued overseas demand weighed on the pace of overall growth.
In June, the S&P Global Eurozone Manufacturing PMI stood at 51.4, marking a slight dip from May’s 51.6 but maintaining its position above the key 50-point mark that signals growth. This kept the index in positive territory for a fifth straight month, while it outperformed an earlier flash estimate of 51.3.
Output within the bloc’s manufacturing sector gained momentum, with the production subindex reaching 51.7, the highest level in two months and up from May’s 51.3. Despite this, only modest growth in new orders was observed, as export orders registered another decline, continuing to dampen demand from abroad.
Among individual countries surveyed, declines in production were limited to Spain and France, while other eurozone members posted gains. Manufacturers cut back on purchases of inputs such as raw materials and semi-finished goods, ending a streak of three months of growth in procurement. Instead, companies relied on drawing down inventories, with pre-production stock falling at its steepest rate since January.
Inflation pressures continued to moderate across the sector. Input cost inflation slowed to its lowest level since March, while the pace of increase in output prices also declined to a three-month low.
Notably, business optimism strengthened to its most upbeat reading in four months. S&P Global highlighted that the bulk of survey responses were gathered before the signing of a memorandum of understanding for a ceasefire between the United States and Iran on June 17, so the full effects on supply chains and energy costs remain to be seen.
