Eurozone manufacturing sector remains in contraction during June

IHS Markit said that manufacturing operating conditions in the euro area deteriorated for a fifth successive month during June.

After accounting for seasonal factors, the Eurozone Manufacturing PMI remained below the crucial 50.0 no-change mark, falling to a three-month low of 47.6, from 47.7 in May. Moreover, the PMI was slightly weaker than the earlier flash reading of 47.8.

A challenging economic environment characterised by ongoing global trade tensions and political uncertainties, plus ongoing underperformance in the autos industry, led to another notable deterioration in manufacturing order books. June marked the ninth month in succession that a fall in new work has been registered, although the latest reduction was the weakest since January. Export orders meanwhile also fell at a marked pace and maintained the sequence of contraction that began last October.

Another fall in overall new work continued to weigh on production volumes, which were down modestly in June and for a fifth successive month. Firms again made notable inroads into their backlogs, which were cut for a tenth month in a row.

June marked the fourth successive month that a shortening of lead times has been registered and this helped contribute to a first fall in input prices for three years. Nonetheless, manufacturers continued to raise their own charges, though competitive pressures meant inflation was marginal and the weakest in the current 33-month sequence of rising charges.

Finally, business confidence remained historically subdued despite improving slightly to a four-month high in June.