US Markets
Eurozone's Private Sector Downturn Eases in June as Inflationary Pressures Soften
The downturn in the euro area's private sector eased in June amid signs of softening inflationary pressures and a continued decline in new orders, according to flash data from S&P Global published Tuesday.The seasonally adjusted S&P Global Flash Eurozone Composite PMI Output Index rose to a three-month high of 49.5 from the previous month's 48.5. The provisional reading is still below the neutral 50 threshold but sits above the consensus estimate of 49.1.The services PMI hit a three-month high of 48.9, against the prior month's 47.7 and the Investing.com market forecast of 48.6, indicating a slower decline in business activity. On the manufacturing side, the PMI edged down to a four-month low of 51.3, compared with the prior reading and consensus estimate of 51.6."The eurozone economy is showing enough resilience to just about stay out of recession ... There is welcome news of an easing in the recent downturn in services activity, with tourism and leisure related industries seeing signs of recovering demand after the initial disruptions from the war in the Middle East," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "Manufacturing meanwhile continues to benefit from inventory building as customers front-run future prices rises or supply issues amid ongoing supply fears linked to the war. However, although widespread supply chain delays contributed to further upward pressure on prices, there are signs that concerns over supply and price trends are starting to moderate."Germany and France, the bloc's two largest economies, both recorded a decline in private sector output, while the rest of the euro area saw the greatest degree of output growth since the start of 2026.Business confidence improved for the second straight month in June, after reaching a 31-month low in April, on the back of increased optimism in both the manufacturing and services sectors. In terms of prices, the rate of input and output cost inflation slowed in June.S&P noted that most of the survey responses came in before the US and Iran signed a memorandum of understanding aimed at ending the war in the Middle East."Both manufacturing and services experienced a slower pace of increase in their input costs and also increased their own prices less quickly than in May. And with energy prices now substantially lower thanks to the US-Iran deal, it could well be that this trend continues in the months ahead (if the deal holds, of course)," ING said in a note. "For the [European Central Bank], this is dovish news. If the environment which the PMI paints persists in the coming weeks, it will deter the ECB from hiking forcefully, as the inflationary environment would not be strong enough to require significant monetary tightening."
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