Inflation affects economic activity in the Eurozone

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The business activity in Eurozone slowed significantly and much more than expected in June, as consumers worried about large increases in bills preferred to postpone purchases, according to survey results.

S&P Global Preliminary Composite Markets Index (PMI), which tracks manufacturing and service companies, fell to 51.9 from 54.8 in May, well below analysts’ forecast of 54. asked by Reuters and at the lowest level since February 2021.

“Economic growth in the Eurozone is showing signs of slowing as the headwind from the outbreak of pandemic demand has already begun to decline, offset by the shock of the cost of living and the plunge in business and consumer confidence,” said the chief economist. of S&P Global, Chris Williamson.

“The influx of new jobs has stalled, mainly due to a slump in demand for products and reduced demand for services from homeless consumers,” he added.

The composite new activity index fell to a 16-month low of 50 points, which is the threshold between growth and contraction, from 53.3 points in May.

The PMI for the dominant services sector sank to 52.8 from 56.1 points.

The increase in demand for services has almost stopped and companies have seen their input costs increase at an almost record rate, with the result that they pass on some of the burden to their customers.

The input price index rose to 78.3 from 77.4 points, the third highest in the 24-year history of the survey after March and April.

Demand for manufactured goods fell due to high prices, the highest rate since May 2020, while the PMI for manufacturing fell to a two-year low of 52 from 54.6 points.

The manufacturing output index fell to 49.3 from 51.3 points, falling below 50 points for the first time in two years.

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