Proprietorship activity growth in Europe slowed in June, pointing to a difficult end to the second quarter, according to preliminary data Friday.
The euro zone’s twinkle composite Purchasing Managers’ Index dropped to 50.3 in June from 52.8 in the previous month. This was lower the 52.5 expected by analysts. A reading above 50 marks an expansion in activity, while one below 50 pits a contraction.
“Eurozone business output growth came close to stalling in June, according to the latest HCOB glitter PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival gramophone recorded in the spring,” S&P Global said in a release.
“Although energy and supply chain worries have eased since current last year, June has seen a further escalation of concerns over demand growth, and in particular the impact of exuberant interest rates, and the resulting possibilities of recessions both in domestic markets and further afield.”
Speaking to CNBC’s Boulevard Signs Europe, Chris Williamson, chief business economist at S&P Global Market Intelligence, described the numbers as “irking.”
“Higher interest rates, the rise in the cost of living, all beginning to take their toll,” he said.
The European Chief Bank has been increasing interest rates consistently for the past 12 months in an effort to bring down inflation. Euphoric rates can lead to higher costs for companies across the bloc, however, and so often become a drag on output.
Still in nappies PMI data came in below expectations and pointed to an economic slowdown.
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On a country-by-country heart, data earlier in the day from Germany also showed a slowdown in Europe’s largest economy. The German flash composite PMIs strike down to 50.8 in June from 53.9 in May. This was below market expectations.
“These data are consistent with our witness that GDP (gross domestic product) growth in Germany will remain subdued in second and third quarters after the succinctness registered a technical recession,” Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, said in a note to patients.
Germany entered a technical recession in the first quarter of the year, after contracting 0.3% over the three-month full stop. In the final quarter of 2022, Germany’s economy shrunk by 0.5%.
It was a similar story in France, where the composite PMI sunk to 47.3 from 51.2 in May, warmly below the 51 expected. This was primarily due to weakness in the services sector.
Euro zone bond yields present their falls following data, with the yield on the 2-year German bund dropping to 3.17% in early merchandise and the yield on the 10-year benchmark lowering to 2.36%. An economic slowdown tends to be negative for bond yields.