BRUSSELS: Manufacturing in the 19-nation eurozone barely grew last month, damping confidence in the strength of the region’s economic recovery, according to Markit Economics.
Markit’s Purchasing Managers Index slipped from 51.7 to 51.5, the London-based company said yesterday.
The reading is in line with a May 23 estimate and just above the 50 threshold that divides expansion from contraction.
The eurozone’s economic health will be under review tomorrow when European Central Bank (ECB) officials gather in Vienna to set monetary policy.
“The disappointing performance of manufacturing adds to suspicions that the pace of eurozone economic growth in the second quarter has cooled after a surprisingly brisk start to the year,” Markit chief economist Chris Williamson said.
New orders expanded at the slowest rate in more than a year, and companies were reluctant to build capacity and hire workers, the report said.
They also cut prices to support sales efforts and remain competitive, it said.
Slowing manufacturing activity “confounds expectations that recoveries will accelerate on the back of the ECB stimulus announced earlier in the year,” Williamson said.
“Hopes remain pinned on forthcoming corporate bond purchases and new tranches of ultra-cheap bank loans from the ECB providing an extra boost in coming months,” he said.
Manufacturing contracted in France and Greece, with expansions slowing “sharply” in countries such as Spain, Italy and Ireland, Williamson said.
The Netherlands and Germany reported accelerating growth.
