Tuesday, June 24, 2008

Eurozone Flash PMIs June 2008

Eurozone Flash PMI - Purchasing Managers' Index: The RBS/Markit Flash Eurozone Composite Output Index, based on around 85% of normal monthly survey replies, fell from 51.1 in May to 49.5 in June, slipping below the 50.0 no-change level to signal a contraction of private sector output for the first time since July 2003. Although only slight, the decline was the largest since June 2003.

Similar sized, marginal, declines were recorded in both the manufacturing and service sectors, with each sector registering a contraction of output for the first time since mid-2003.

Moreover, in a sign that worse may be yet to come, expectations of business activity in 12 months' time in the service sector slumped to a 10-year survey record low in June.

Incoming new business fell for the second successive month, dropping at the fastest rate since June 2003 as declines were recorded in both manufacturing and services.

Input price inflationsurged higher in June, reversing the easing trend seen in the previous two months and driving the overall rate of cost inflation to the highest since October 2000. Raw material input prices in manufacturing rose at the fastest rate for 23 months, with the rate of increase picking up sharply in June, while service providers' costs (which include wages and salaries) rose at the steepest rate since September 2000.


Flash estimates from Markit Economics suggest that the German purchasing managers index for manufacturing fell to 52.3 in June from 53,6 in May.

The German services PMI also saw a decline, falling to 53.3 from May's 53.8 level.

So both German manufacturing and services are still expanding, albeit at a slwoer pace than previously.

While noting that output had diminished in both services and manufacturing, NTC Economics also highlighted the rising input and output costs due to rising oil and raw material prices.

"German private sector companies signalled that input cost inflation accelerated to a ninety-three month high during the latest survey period, underpinned by the effects of the recent spike in crude oil prices," the report said.

"Meanwhile, output prices at German private sector companies continued to rise robustly in June, with the rate of inflation the second-strongest since September 2000," it continued. "This was led by marked increases in prices charged by firms operating in the service economy."


The French economy may well be contracting in June. According to Markit Economics who released data on the purchasing managers indexes for manufacturing and services earlier today, both fell into contraction territory in June. According to the flash estimates, the manufacturing PMI fell to 49.2 - its lowest level in more than three years - after rising to 51.5 in May.

"The drop in output reflected a contraction of new orders for the second time in the past three months, with the principal weakness of demand centred on the domestic market as export orders fell only slightly," Markit said in a press release.

The services PMI for France also slipped to 49.2, after falling to 50.5 May. The services PMI is now at its lowest level since November 20

Services have obviously been contracting for several months now, at least according to this indicator.

No comments: