Euro Zone Private Sector Stumbles Through Weak Second Quarter

The composite index rose to 49.5 from May’s 48.5, reaching a three-month high yet remaining below the 50.0 threshold that separates growth from contraction. ING economist Bert Colijn noted that while the easing of price pressures offers a sliver of optimism, the data confirms a stagnant period for the region’s economy. Despite earlier projections of 0.1% expansion for the quarter, the fourth straight month of falling new orders suggests a deeper malaise.

National performances varied sharply: Germany faced its steepest downturn in 18 months as services activity faltered, while France saw a slight moderation in its decline. Outside the bloc, Britain’s services sector suffered its worst performance in nearly three-and-a-half years. On the positive side, input cost inflation hit its lowest point since February, potentially providing the European Central Bank with flexibility to shift focus toward domestic growth concerns rather than solely combatting energy-driven inflation. Manufacturing output managed to expand, driven largely by inventory building as businesses hedged against future supply disruptions.