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HCOB's composite Purchasing Managers' Index for the currency
union, compiled by S&P Global and seen as a good gauge of
overall economic health, dropped to 50.9 in June from May's
12-month high of 52.2.
It was just above a preliminary 50.8 estimate and the fourth
consecutive month above the 50 mark separating growth from
contraction.
"Growth in the euro zone can be attributed fully to the service
sector. While the manufacturing sector weakened considerably in
June, activity growth in the services sector continued to be
nearly as robust as the month before," said Cyrus de la Rubia,
chief economist at Hamburg Commercial Bank.
The services PMI dipped to 52.8 last month from 53.2 but was
ahead of the 52.6 flash estimate.
Manufacturing activity across the bloc took a turn for the worse
last month as demand fell at a much faster pace despite
factories cutting their prices, a sister survey showed on
Monday.
Falling demand for manufactured goods, alongside slower growth
for services, meant the composite new business index slumped
below breakeven for the first time since February, registering
49.4 compared to May's 51.6. The flash reading was 49.2.
That was despite the European Central Bank delivering a widely
predicted cut to interest rates last month. It is expected to
cut again in September and December, according to a Reuters
poll.
Strong wage data and still sticky price pressures have increased
uncertainties around the rationale for more cuts but both input
and output cost pressures eased, according to the PMI.
Charges levied by services firms rose at the slowest pace in
over three years. The output prices index fell to 53.5 from
54.2.
"The ECB ... is getting some support for this decision from the
HCOB Services PMI price indices," de la Rubia added.
"Looking forward, the ECB will remain cautious, as the price
increases are still way above pre-pandemic averages and still
unusually high given the fragile state of the economy."
(Reporting by Jonathan Cable; Editing by Christina Fincher)
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