Eurozone June flash services PMI 52.4 vs 54.5 expected

• Prior 55.1
• Manufacturing PMI 43.6 vs 44.8 expected
• Prior 44.8
• Composite PMI 50.3 vs 52.5 expected
• Prior 52.8

On the balance of it, the fall in services activity isn't as stark as the French reading alone. However, it still leads to the euro area economy basically grinding to a halt towards the end of Q2. There was a cooling in inflation pressures but a weakening in demand conditions is largely outweighing that as the spring rebound falters towards the summer in Europe. HCOB notes that:

"If the ECB only had to control goods prices, then Frankfurt would toast the end of inflation, because even in June the PMI survey shows that purchasing and selling prices have fallen significantly. Moreover, given the recession in manufacturing indicated by the PMI, one would start with interest rate cuts. But this picture is incomplete. In the more important part of the economy, the private services sector, prices continue to rise, and that's why the core rate of inflation has been so slow to decline."

"In addition to the persistent discrepancy that has already been observed for several months between manufacturing on the one hand and services on the other, there are also clear regional differences. In France, for example, activity in the service sector contracted in June according to the PMI survey, whereas in Germany it continues to expand, albeit at a slower pace. This is also reflected in new orders, which are falling in France but rising in Germany - again at a declining rate. High inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term and more difficult financing costs are cited as reasons for this weakness in France, which may also have suffered economically from intense strike and protest activity in spring."

"After Eurozone GDP fell for the second time in a row in the first quarter, the probability has increased somewhat that the GDP change will again carry a negative sign in the current quarter, due in part to weak services activity in France. Even if our baseline scenario of slightly positive Eurozone growth in the second quarter still becomes reality, the downward trend in the Composite PMI points to a difficult second half of the year as companies across all sectors face deteriorating order books."