Eurozone downturn slows markedly for second month running in June

According to the report from IHS Markit, the eurozone economic downturn eased markedly for a second successive month in June as lockdowns to prevent the spread of the coronavirus disease 2019 (COVID-19) outbreak were further relaxed. The month also saw a continued strong improvement in business expectations for the year ahead.

The flash Eurozone Composite PMI rose further from an all-time low of 13.6 seen back in April, surging to 47.5 in June from 31.9 in May. The 15.6-point rise was by far the largest in the survey history with the exception of May’s record increase. The latest gain took the PMI to its highest since February, though still indicated an overall decline in business output.

Output fell again in both manufacturing and services, the latter showing the slightly steeper rate of decline. Both sectors nevertheless reported markedly reduced rates of contraction for a second month running. The ongoing downturn in output was linked to a fourth consecutive monthly deterioration of inflows of new business, which in turn contributed to a further steep decline in backlogs of orders for companies to work through. However, rates of decline of both new orders and order book backlogs moderated considerably during the month. For those companies continuing to report falling output and order books, the pandemic was again by far the most commonly cited cause. 

The relaxation of some lockdown measures, and planned further easing in coming months, also helped propel business sentiment for the coming year to its highest since February. The number of optimists exceeded pessimists for the first time in four months. Sentiment improved markedly in both manufacturing and services, resulting in the  second-largest rise in the output expectations index since comparable data were first available in 2012.