By Maria Martinez
Eurozone economic growth deteriorated sharply to a 16-month low in June, according to preliminary purchasing managers index data, reflecting a stalling of demand growth, S&P Global said.
Manufacturing output contracted for the first time in two years and service-sector growth cooled considerably, easing most notably for consumer-facing services, according to the report released Thursday.
The S&P Global eurozone composite PMI fell to 51.9 in June from 54.8 in May, according to the flash reading. While the latest reading indicates an expansion of business activity for the 16th straight month, the rate of growth has moderated.
“Excluding pandemic lockdown months, June’s slowdown was the most abrupt recorded by the survey since the height of the global financial crisis in November 2008,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the report.
The slowdown means the latest data signal a rate of GDP growth of just 0.2% at the end of the second quarter, down sharply from 0.6% at the end of the first quarter, with the worse likely to come in the second half of the year, Mr. Williamson said.
Looking at prices, average charges for goods and services rose sharply again in June, the report showed. Although the rate of inflation eased further from April’s all-time high to the lowest since February, it remained significantly higher than anything seen prior to the pandemic over the survey’s 25-year history.
Companies also scaled back their business expectations for output over the coming year to the lowest since October 2020, S&P Global said. “Both the stagnation of demand and worsening outlook were widely blamed on the rising cost of living, tighter financial conditions and concerns over energy and supply chains linked to the Ukraine war and ongoing pandemic disruptions,” the report said.
Write to Maria Martinez at maria.martinez@wsj.com