Modest relief in Eurozone PMIs – Nordea Markets

Anders Svendsen, an analyst at Nordea Markets, notes that the Eurozone PMIs increased slightly in June from low levels, driven by a substantial improvement in France and some improvement in German manufacturing. ECB still needs clear improvement in H2 to regain confidence that inflation will converge to its target.

• “Euro area:

1. Composite PMI rose marginally to 52.1 from 51.8, close to expectations
2. Manufacturing PMI was little changed at 47.8, close to expectations

• Germany:

1. Composite PMI unchanged at 52.6, close to expectations
2. Manufacturing PMI rose almost one index point to 45.4, better than expected

• France:

1. Composite PMI substantially higher at 52.9 up from 51.2, much better than expected
2. Manufacturing PMI substantially higher at 52.0 up from 50.6, much better than expected.

• The stabilization in the German manufacturing sector, as well as the clear improvement in France, should give some modest relief to Euro-area growth concerns.
• The PMI levels still point to growth just below potential but at least and clear improvement in the second half of the year is probably still required for the ECB to regain confidence in the convergence of core inflation towards the inflation target.”