FINWIRES · TerminalLIVE
FINWIRES

Eurozone's Private Sector Output Stabilizes in June Amid Cooling Inflation

By
Eurozone's Private Sector Output Stabilizes in June Amid Cooling Inflation

Private sector output in the euro area saw a stabilization in June as inflationary pressures eased and growth in manufacturing offset a slower decrease in the services sector, after two months of decline.

The seasonally adjusted S&P Global Eurozone Composite PMI Output Index rose to 50 in June from the previous month's 48.5 and the flash estimate of 49.5, final data from S&P Global showed Friday. The latest reading marks a three-month high and the first time the index has moved out of the contraction zone since March.

On the services side, the PMI reached its highest level in three months at 49.4, against the prior 47.7 and the initial reading of 48.9, indicating an overall "marginal" rate of decline in business activity among service providers.

Italy, Spain and Ireland logged an increase in overall business activity in June, while the downturn in Germany and France, the bloc's two largest economies, eased from the prior month. The rest of the euro area, meanwhile, achieved stability despite seeing a reduction in demand and new business volumes.

"A key drag on economic growth since the outbreak of the war in the Middle East has been the subduing of demand from consumers due to the energy price spike, but these inflationary pressures have shown signs of cooling markedly in June. Input cost inflation in the service sector fell in June to the greatest extent since data were first available in 1998, barring only that seen in the COVID-19 lockdowns of early 2020," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "This has helped support a revival of growth of services activity in some of the sectors which had been hardest hit by the war, notably leisure and tourism."

Business confidence further improved across the bloc in June, reaching a four-month high, with companies' growth outlook over the next 12 months at its most optimistic since the outbreak of the war.

Related Articles

China's June Private Sector Growth Moderates as Services Activity Softens, RatingDog Survey Shows
US Markets

China's June Private Sector Growth Moderates as Services Activity Softens, RatingDog Survey Shows

Overall business activity across China's private sector expanded at a slightly softer pace in June, with the headline RatingDog China Composite Output Index falling to 53.6 from 54 in May.The index, compiled by S&P Global and published Friday, deviated from the official government composite PMI released by the National Bureau of Statistics, which edged up to 50.6 from 50.5 the previous month.The RatingDog China General Services Business Activity Index slipped slightly to 54.1 from 54.4 in May, according to the same S&P survey on Friday. In comparison, the official state non-manufacturing PMI barely rose from the neutral line, coming in at 50.2 in June from 50.1 in May.S&P survey respondents attributed higher services activity to increased new businesses, stronger client demand, acquisition of new clients and more project developments. The survey also indicated that cost pressures eased since May.New business volumes increased in June amid a boost in demand, including in international markets, which prompted firms to hire more manpower. Employment rose to its strongest level since July 2024Services exports grew to its quickest rate since October 2024.On the manufacturing side, factory activity slowed to a three-month low, with the RatingDog China General Manufacturing PMI sliding to 51.7 in June from 51.8 in May as new order growth eased, according to earlier data.This still outperformed the official government manufacturing PMI, which returned to growth at 50.3 from a flat 50.0 in May."Total new business increased for the forty-second consecutive month, with growth decelerating slightly while remaining at a firm level, supported by domestic demand," RatingDog founder Yao Yu said."A notable positive signal came from external demand, as new export business expanded at the fastest pace so far this year, reinforcing the trend of improvement in overseas orders."In a June 30 note, ING's chief economist for Greater China, Lynn Song, said policy support should be strengthened as domestic retail demand experiences volatility."It seems increasingly clear that the domestic demand engine of growth is sputtering, and further policy support would be beneficial and help avoid an increasingly unbalanced growth profile," Song said.

Shanghai Composite^SZSE
Samsung, SK Hynix Lead KRW 392 Trillion Investment in South Korea's Chungcheong Region
US Markets

Samsung, SK Hynix Lead KRW 392 Trillion Investment in South Korea's Chungcheong Region

Samsung Electronics (KRX:005930), SK Hynix (KRX:000660) and Celltrion (KRX:068270) have pledged a combined 392 trillion won ($254 billion) to build a tech and biotech hub in South Korea's Chungcheong region.South Korea's Ministry of Trade, Industry and Energy announced the plans at a Thursday briefing held at Samsung Display's Asan campus.The event, which coincided with the first glass substrate delivery for Samsung Display's 8.6-generation OLED production line, follows the government's mega-projects briefing last week, where the ministry also announced a 550 trillion won project in cooperation with the government, Samsung, SK Hynix and Naver (KRX:035420).At the latest event, Samsung outlined a 140 trillion-won plan to transform Chungcheong into "a hub for materials and components."Through Samsung Display, the group plans to expand high-value-added OLED lines in Asan for smartphones, IT devices, XR, automotive and humanoid and wearable applications, according to a separate press release from Samsung.The company will also build an HBM manufacturing base with five fab lines in Onyang, plus expanded facilities in Cheonan.Samsung expects the plan to create 250,000 jobs.Separately, SK Hynix CEO Kwak Noh-Jung said the company will invest a total of 100 trillion won in Cheongju, of which 80 trillion won will be spent on M17 NAND production and 20 trillion won for P&T7 advanced packaging.P&T7 is targeted for completion by the end of 2027, while M17 construction is expected to begin next year, with operations slated to start in the first half of 2029.Kwak cited an increasing demand for enterprise SSDs and NAND flash memory tied to the adoption of AI services as the reason for the expansion.SK Group separately plans to build a 1-gigawatt AI data center in the Chungcheong region as part of a push to build a total of 15 GW of AI data center capacity across the country.Meanwhile, biopharmaceutical company Celltrion (KRX:068270) will also invest 2 trillion won in biopharmaceutical production facilities within Chungcheong, according to the ministry.The planned facility will manufacture pre-filled syringes, with plans to boost production capacity by 50 million syringes, raising Celltrion's total annual capacity in the region to 70 million syringes, Korea JoongAng Daily reported, citing the event.The ministry also hinted that other companies have earmarked about 150 trillion won in the region.

KRX:000660KRX:005930KRX:035420KRX:068270
Japan's Services Sector Rebounds in June Amid Rising Cost Pressures, S&P Global Survey Shows
US Markets

Japan's Services Sector Rebounds in June Amid Rising Cost Pressures, S&P Global Survey Shows

Japan's services sector returned to growth in June after stalling in the previous month, according to data released by S&P Global on Friday.The latest reading, which gauges services activity, rose to 52.2 in June from 50.0 in May, signaling a renewed expansion in business activity after activity stalled the previous month.The broader Japan Composite Output Index, which combines manufacturing and services activity, increased to 52.8 from 51.1, marking the fastest expansion in overall private sector output in three months.The upturn was supported by a solid increase in new orders, with firms citing stronger domestic demand, new product launches, and upcoming events.Export business, however, declined further as weaker overseas demand and lower tourist arrivals weighed on sales.Input cost inflation accelerated to its fastest pace in four years, driven by higher oil, energy, food, and labor costs.Although firms continued to pass on higher expenses to customers, the pace of selling price inflation eased from May's near-record high.Service providers continued to add staff in June as they sought to expand capacity and fill vacancies.Although hiring picked up from May, the pace of job creation remained below the average seen over the past year, while unfinished work rose at the fastest rate since March."Japan's service sector moved back into growth territory in June and, when combined with the manufacturing PMI survey results, signalled a slower and modest expansion of Japan's private sector over the second quarter as a whole," Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said."The survey's price gauges signalled another rapid increase in costs, with expenses rising to the greatest extent in four years as the war in the Middle East continued to place pressure on supply chains and prices. This drove another marked rise in selling prices, to indicate that official price measures will likely move higher in the months ahead," she added.Business confidence improved slightly in June but remained among the weakest levels since the pandemic. Firms cited uncertainty surrounding the conflict in the Middle East, rising costs, and labor shortages as key concerns.The survey comes after the Bank of Japan raised its policy rate by 25 basis points to 1% last month, the highest level since 1995, citing growing inflation risks from higher energy costs and signaling that further policy tightening remains under consideration.Former Bank of Japan Executive Director Kenzo Yamamoto said the central bank could raise interest rates sooner than markets expect as it continues to normalize monetary policy, according to Bloomberg News."The BOJ is in a situation where it needs to move quickly," Yamamoto was quoted as saying by Bloomberg, adding that the next rate hike would likely come before December.

Nikkei 225