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The
downturn was broad-based with surveys published earlier on
Monday showing factory activity in all four of the euro zone's
biggest economies contracted last month.
Compiled by S&P Global, HCOB's final manufacturing Purchasing
Managers' Index (PMI) fell to 43.4 from May's 44.8, its lowest
since the COVID pandemic was cementing its grip on the world,
below a preliminary reading of 43.6 and further from the 50 mark
separating growth from contraction.
An index measuring output, which feeds into a composite PMI due
on Wednesday that is seen as a good gauge of economic health,
dropped to an eight-month low of 44.2 from 46.4.
"There is growing evidence that the capital-intensive industrial
sector is reacting negatively to the ECB's interest rate hikes,"
said Cyrus de la Rubia, chief economist at Hamburg Commercial
Bank.
In its battle to try and bring high inflation back to its 2%
target the ECB has already added 400 basis points to key rates
and is widely expected to add another 25 this month, hitting the
spending power of indebted consumers and companies.
Demand weakened at the fastest pace in eight months despite
sharper price cuts on manufactured goods so less optimistic
factories reduced their workforce for the first time since early
2021. The employment index fell to 49.8 from 51.5.
(Reporting by Jonathan Cable; Editing by Toby Chopra)
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