Eurozone manufacturing PMI sets fresh record high in June

According to the report from IHS Markit, growth of the eurozone manufacturing sector hit new heights during June, with the headline PMI setting a fresh survey record for a fourth successive month.

After accounting for seasonal factors, the PMI improved to 63.4, up from 63.1 in May and firmer than the earlier flash reading. June marked a twelfth successive month that the index has posted above the 50.0 no-change mark that separates growth from contraction.

Once again, all three market groups registered noticeable improvements in operating conditions. In line with recent trends, it was investment goods producers that recorded the strongest growth, followed by intermediate goods which registered its best PMI reading in the survey history. Consumer goods continued to lag, though growth here was still the sharpest since June 2000.

Overall production growth in the eurozone’s manufacturing sector remained elevated during June, edging up slightly since May to a level close to the survey records registered earlier in the year. Output continued to increase at especially strong rates in both Germany and the Netherlands. Strong growth in production was again closely linked to positive demand developments, with new orders experiencing their third-fastest ever reported increase during June. Growth remains broad-based, with new export orders again increasing sharply over the

month.

Manufacturers struggled to meet higher sales in June, as evidenced by a near series record increase in backlogs of work. Moreover, supply-side constraints again placed some restrictions on production, as strong global demand continued to weigh heavily on suppliers. Average lead times deteriorated to the second-greatest degree in the survey history during June (surpassed only by May).

Finally, confidence about future output edged higher in June reaching a level that was close to April’s survey record. Manufacturers remain optimistic that the continued reopening of economies as the negative effects of the pandemic recede will bolster output and sales in the next year.