The European Commission confirmed that recovery slowed down in June. The Economic Sentiment Indicator (ESI) which tracks GDP relatively well, decreased in June, down to 102.0. This is in line with the PMI composite index which also decreased. However, it remains consistent with a slight acceleration in GDP in the second quarter.
  • Confidence decreased in June. The Economic Sentiment Indicator (ESI) released by the European Commission came in at 102.0 in June, down from 102.6 in May. This is in line with the PMI composite index which also decreased. Despite this decrease, the index was still higher on average in Q2 (at 102.2) than in Q1 (at 101.6) All in all, the survey remains consistent with a slight acceleration in GDP in the second quarter.

  • The improvement came from southern countries, especially Spain and Greece, while confidence indicator fell in France and Germany. Germany remains the main driver of the recovery, although a few countries have now reached a level of confidence above their long-term average. In France, following the PMI and the INSEE business climate surveys released earlier this week, this decrease is not surprising. It shows that activity in France might struggle more-than-expected.

  • The main factor behind the Eurozone confidence index was a decline in manufacturing confidence. Relative good news from the survey is that confidence in services and in retail increased for two consecutive months as managers saw demand expectations rise. It shows that recovery, which was led so far by the manufacturing sector, might become more self-sustained.. Yet all the headwinds have not disappeared. Domestic demand in the Eurozone is still subdued. Consumer confidence slightly decreased in June, while their fear of unemployment rose, as well as their assessment on their future saving. Note that they were more optimistic regarding their expected financial situation.

  • The increase in the most-domestically oriented services sector could result in improvement in employment expectations. However, and despite an improvement of 0.1 point in the unemployment rate, employment expectations remained unchanged, except in services.

  • Price pressures strengthened from the input side as selling price expectations rose in all business sectors. By contrast consumer price expectation decreased following a downward trend since January.

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