The euro zone manufacturing sector moved a step closer to stabilization at the end of the second quarter, with rates of contraction in output and new orders continuing to ease. Markit's Eurozone Manufacturing Purchasing Managers Index (PMI) was at a 16-month high of 48.8 in June, up from 48.3 in May and slightly above the earlier flash estimate of 48.7. Over the second quarter as a whole, the average reading for the headline PMI of 47.9 was the highest since Q1 2012. However, the Markit Final Eurozone Manufacturing PMI was below the neutral 50 points signalling a deterioration in business conditions since August 2011.
Among the nations covered by the survey, only the German PMI failed to rise last month. Meanwhile, euro zone manufacturing output fell for the 16th successive month in June, although the rate of contraction was the weakest during that sequence. The rate of contraction in new orders at euro area manufacturers eased to a two-year low in the month in question, as companies indicated that downturns in some domestic markets continued to ease. New export orders posted a slight decline, with rates of reduction accelerating in Germany, France, Ireland and Greece.
Chris Williamson, chief economist at Markit, said, "Eurozone manufacturing is showing welcome signs of stabilizing. Both output and new orders barely fell during June, and on this trajectory a return to growth for the sector is on the cards for the third quarter."