Euro: Eurozone PMIs show two-speed recovery – TD Securities

TD Securities’ Global Strategy Team reports that June Eurozone PMIs confirm a divergence between stabilizing German manufacturing and still weak French services. German manufacturing hovers around 50 with improving sentiment and bottoming new orders, while French services remain in contraction as demand and new orders fall, forcing discounting despite cost pressures and leaving employment and confidence only tentatively recovering.

German manufacturing steadies as French services lag

"June PMIs point to a continued two-speed dynamic between manufacturing and services sectors."

"Germany’s manufacturing sector hovers at stabilization with PMI read at 50.0 (TDS: 50.0; mkt: 50.2; prior: 50.1)."

"Sentiment is improving and new orders are broadly bottoming out, which is helping to support output, even as employment continues to fall as firms remain cautious and wait for a more durable recovery in demand."

"By contrast, French services remain firmly demand-constrained with the PMI at 47.4 (TDS: 45.5; mkt: 46.0; prior: 44.3)."

"There, activity is still contracting, albeit at a slower pace, as new orders continue to decline amid weak client appetite and lingering uncertainty, leaving firms reliant on discounting despite input cost pressures to try to stimulate activity, while employment merely stabilizes and confidence only tentatively recovers with the Middle East conflict resolution."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)