The PMI indices (Purchasing Manager Indexes) – among the macroeconomic indicators most followed by economists, managers and traders – leave no room for interpretation: the The state of health of the economies of the Old Continent and the United States continues to be very different. While the former disappoint, showing a certain weakness, the latter continues to demonstrate continuous strength, indeed even an acceleration in some segments.
In particular, this emerged from June data of PMIs, indices that are based on responses to a questionnaire from purchasing managers in the manufacturing and services sectors. The indications of purchasing managers are particularly important as they buy raw materials, semi-finished products and in general everything that is necessary for their companies to produce, and therefore have a well-informed perspective on the performance of the various sectors.
In the Eurozone the recovery slows
From the analysis of provisional data from the PMI survey by Hamburg Commercial Bank and S&P Global, at the end of the second quarter the eurozone economy suffered a setback. For the first time in four months, the volume of new orders fell, causing a slowdown in growth in economic activity and employment. At the same time, confidence fell to its lowest level since February while the rate of inflation of purchasing costs and selling prices fell to their lowest levels in six and eight months respectively.
The slowdown in the expansion of activity in June signals a weakening of growth in the tertiary sector and a more pronounced decline in manufacturing productionwith the latter marking the biggest drop in a year.
“On a sectoral basis, the PMIs suggest that manufacturing, despite having passed the minimum point, is stabilizing at best, with the most anticipatory components not yet showing clear signs of an imminent significant reacceleration – commented Intesa analysts Sanpaolo – I services remain expanding and continue to drive the recovery but they seem to be starting to lose some momentum“.
Examining the eurozone from a geographical point of view, the Germany recorded a slight increase in activity in June, while the rest of the eurozone continued to indicate strong expansion but at a rate slowed to its lowest level in four months. There Francereporting its second consecutive monthly contraction, recorded a less positive result.
In the USA, growth lengthens while prices fall
In June 2024, growth in economic activity in the United States reached its fastest level in 26 months, signaling a strong conclusion to the second quarter. The service sector led the recovery with further support from the manufacturing sector, although the latter’s recent recovery has lost some momentum, according to provisional data from S&P Global’s PMI survey.
The improvement of trust of businesses for the year ahead, particularly in the services sector, as well as renewed pressure on operational capacity from increased demand, have meanwhile encouraged companies to increase payroll numbers for the first time in three months.
Meanwhile, the selling price inflation indicator fell, due to slower growth in production costs, to indicate a moderation of inflationary pressures.
“The PMI is at a level essentially consistent with the economy growing at an annualized rate of just under 2.5% – explained Chris Williamson, Chief Business Economist at S&P Global Market Intelligence – The recovery is generalized, as growing demand continues to filter through the economy. Although driven by the services sector, which reflects strong domestic spending, the expansion is supported by the continued recovery of the manufacturing sector, which this year is experiencing its best growth period in two years.”
