Germany’s flash Manufacturing PMI drops to 50.0 in June as expected

Sagar Dua FXStreet

German preliminary HCOB Manufacturing Purchasing Managers’ Index (PMI) arrives lower at 50.0 in June, as expected, from 50.1 in May. The 50.0 figure is a boundary line that separates expansion from contraction.

The overall business activity in Germany declines again, but at a faster pace. The Composite PMI has come in at 48.0, lower than the previous reading of 48.8. The data was expected to arrive higher at 49.9.

Meanwhile, the Services PMI contracts at a faster pace to 46.8 from 48.1 in May. Private service sector activity was expected to decline at a moderate pace to 48.7.

Market reaction

The Euro (EUR) faces selling pressure as the Eurozone's overall business activity declines again. As of writing, EUR/USD trades 0.1% lower at around 1.1418, close to its 10-month low of 1.1411.

Economic Indicator

HCOB Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in Germany’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. As Europe’s main manufacturing hub, German PMI data can also be a bellwether of the sector’s health in the broader continent. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.

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