Eurozone: PMIs suggest activity slowed more than expected in June - BBH

The Eurozone flash PMIs were reported and although activity is still at an elevated level, it slowed more than expected in June, explains the analysis team of BBH.  

Key Quotes

“The composite eased to a five-month low of 55.7 from 56.8.  The median forecast was for 56.6.  Manufacturing edged up to 57.3 from 57.0.  New orders rose (58.5 from 57.8), though new export orders softened and employment eased.  Prices also decelerated (output prices 54.0 vs. 54.1, and input prices 58.3 vs. 62.0).  Services were the source of disappointment.  The headline activity eased to 54.7 from 56.3.  Forward-looking new business fell to 54.6 from 55.1.”

“German manufacturing slowed to a still lofty 59.3 from 59.5 in May.  New orders rose, and at 61.5 is the highest in more than six years.  Services slowed to 53.7 from 55.4.  Together, this led to a drop in the composite to 56.1 from 57.4.”

“France's manufacturing PMI rose (55.0 from 53.8), but the decline in services (55.3 from 57.2) dragged the composite to 55.3 from 56.9, which is a five-month low.  Separately, France revised up Q1 GDP growth to 0.5% from 0.4% to match the Q4 performance.  This represents the strongest six-month pace for France since Q4 10-Q1 11.”

“The flash Eurozone PMI does not change the macro picture much.  The September ECB meeting, with updated staff forecasts, is seen as a likely venue for officials to announce its intention to reduce its asset purchases, but extend them into the first part of next year.”

“Like the yen, the euro's range this week was set on Monday (~$1.1215) and Tuesday (~$1.1120).  There are nearly 2.2 bln euro of options struck between $1.1175 and $1.1200 that expire today.  The euro has not been above $1.12 since the start of the week.  In May and June, the euro has alternated between advancing and declining weeks.  True to the pattern, last week it rose, and this week it fell.”