- Prior 44.8
The manufacturing output index falls to an eight-month low as subdued demand conditions are weighing. Other things of note, we are seeing manufacturing employment decline for the first time since January 2021 and
business confidence dipped to a seven-month low. HCOB notes that:
“Eurozone manufacturing production contracted for the third month in a row in June, according to the PMI output index, with
the rate of decline accelerating and pointing to a worsening of factory conditions. New orders also fell at a faster rate, which
further increases the likelihood that industrial production, which contracted by 0.9 % month-on-month in the first quarter
according to Eurostat, will drop again in the second quarter.
“There is growing evidence that the capital-intensive industrial sector is reacting negatively to the ECB’s interest rate hikes.
Companies surveyed reduced their headcounts for the first time since January 2021, and purchasing activity declined at one
of the worst rates on record. Cuts to sales prices for the second month in a row come as no surprise given the weakness in
demand and rapid rate of cost deflation.
“The downturn is visible across the board geographically as all four of the biggest eurozone countries remained in
contraction in June. In terms of new orders, the weakness in demand is most pronounced in Germany, followed by Italy and
France.
“Delivery times are continuing to normalize, with the corresponding index signalling that since February, companies in the
currency union are receiving their goods more quickly than in the previous month. While is seems as if companies do not
complain so much anymore about delivery times, shortages of materials are still a lingering issue. According to DG ECFIN,
for example, around 28% of companies in the eurozone complained of a shortage of materials in the second quarter – by
2019, this figure had averaged just under 7%.”
/EUR