Euro Zone Manufacturing PMI Falls to Lowest Level in Three Years

European Economy | Written by CEP News | Jul 01 08 09:05 GMT |
(CEP News) Frankfurt - According to data published by Markit Economics, the euro zone purchasing managers index for manufacturing fell further to 49.2 in June following May's slip to 50.6. June's reading is the lowest since May 2005. However, economists had expected an even stronger fall to 49.1 for the month.

The PMI figure was dragged down principally be the deteriorating new orders levels, the indicator for which fell to its lowest level since June 2003.

While most of the components of the index showed marked declines in June, average raw material prices saw the largest monthly gains since July 2006, while average output prices showed stronger-than-expected increases as firms hoped to pass on their costs to consumers.

Looking at the individual euro zone states: the manufacturing PMI for Italy fell to 46.9 in June, its weakest reading since December 2001. Spain's manufacturing PMI continued its decline, slipping to 40.6 in June from May's 43.8 reading. The French manufacturing PMI fell to its lowest level since May 2005 with a reading of 49.2 following May's rebound to 51.5, while Germany's manufacturing indicator declined to 52.6 after holding firm at 53.6 in May.

"The ECB's policy dilemma has intensified with the publication of national PMI data within the euro area, "RBS Economic Head Jacques Cailloux said in a press release. "France is clearly heading in the same direction as Spain and Italy, which are both contracting at alarming rates. Higher interest rates will hit hardest those countries that have slowed most and accentuate country divergence."

By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it

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