Resilient Eurozone Manufacturing Offsets Service Sector Decline

Eurozone manufacturing experienced its strongest quarter since early 2022, bolstered by easing cost pressures despite weak export demand. June's PMI was 51.4, above contraction levels, reflecting resilience amidst service sector declines. Reduced oil prices and moderated input cost inflation provided relief, while business confidence improved despite historical lows.

Eurozone manufacturing posted its best quarterly performance since early 2022, buoyed by easing cost pressures despite continued sluggishness in export demand. According to a survey, manufacturing activity nudged up even though the overall growth was the lowest since February this year.

The S&P Global Eurozone Manufacturing PMI declined to 51.4 in June from May's 51.6, but still remained above the critical 50.0 mark, indicating expansion for the fifth consecutive month. The reading slightly surpassed the preliminary estimate of 51.3, presenting a hopeful outlook for the eurozone's economic stability.

New orders modestly increased in June following stagnation in May, while export demand remained a slight hindrance. Despite declines in Spain and France, overall factory output climbed to a two-month high, with easing input and output price inflations offering some relief. A recent interest rate hike from the European Central Bank, aimed at curtailing inflation driven by energy costs, enters the scene amid rising business confidence levels.