The S&P Global Manufacturing purchasing managers index recorded its fifth straight month of growth despite registering a small fall to 51.4, slightly below May’s 51.6.
Output strengthened, reaching a two‑month high, supported by a modest improvement in demand. Despite this, supply conditions remained difficult, with supplier delivery times still far slower than before the Middle East conflict, though showing early signs of easing.
Production increased for the sixth straight month, rounding off the strongest quarter for eurozone manufacturing since early 2022. Most countries recorded growth, except Spain and France, which saw no expansion.
New orders rose marginally after stagnating in May, but export demand continued to weaken for a second month. Firms responded by reducing purchases of inputs and drawing down inventories, leading to the sharpest depletion of pre‑production stocks since January.
Cost pressures also eased notably, with input price inflation softening to its lowest level since March, helped by a sharp drop in oil prices. Output charge inflation also cooled, reaching a three‑month low as manufacturers became less aggressive in their pricing.
Employment continued to decline, though at a slower pace than in May. Manufacturers were able to reduce backlogs for a second month, helped by the use of pre‑purchased materials that mitigated supply disruptions. Vendor capacity remained stretched, but the delivery‑times index improved to a three‑month high, indicating tentative relief in supply bottlenecks.
Business confidence improved to a four‑month high, though expectations for the year ahead remained slightly below average. Much of the survey was conducted before the 17 June US–Iran ceasefire memorandum of understanding.
"A further rise in manufacturing output in June adds to signs of encouraging resilience in the eurozone economy. June’s expansion in fact rounds off the strongest calendar quarter for euro area manufacturing production since the opening months of 2022, and will offset the recent decline that’s been recorded in the services economy,” said S&P chief business economist Chris Williamson.
"This sustained growth was accompanied by a welcome cooling of cost pressures, largely reflecting the sharp drop in oil prices seen during the month, alongside an easing of supply worries.”
"However, whether the better news out of the Middle East leads to a further improvement in the near-term performance of the manufacturing economy is not clear cut.”
Reporting by Frank Prenesti for Sharecast.com