- Prior 45.7
Both the headline reading and the output index are at 14-month highs, signaling a softer contraction in the euro area manufacturing sector. Business confidence picked up while the downturn in new orders, exports, and purchasing activity all softened on the month. HCOB notes that:
“This could be the turning point for the manufacturing sector. The industry is on the verge of halting the production decline that has persisted since April 2023. This is largely supported by more favourable trends in intermediate and capital goods. Additionally, more companies are reporting positive developments in order intakes from both domestic and international markets, although this is still being offset as a larger proportion saw declines in May. Encouragingly, business confidence regarding future production is at its highest level since early 2022.
“Optimism is growing, but companies remain cautious. They continue to reduce personnel and hold back on purchasing intermediate goods. This caution may also be reflected in the accelerated decrease in inventories of produced goods. This suggests that some companies were surprised by recovering demand, which they couldn't or didn't want to immediately meet with increased production.
“Germany might soon be ready to overtake its main Eurozone competitors. Although Germany’s HCOB Manufacturing PMI remains the lowest of the four major Eurozone economies, it is close behind Italy. Italy, as of lately considered an outperformer, has seen its situation deteriorate. France follows closely, as its industrial sector has improved less than that of its northern neighbour. Spain however remains out of reach for now, being the only one of the Euro-4 countries with a growing industrial sector.”
