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Business growth in the eurozone slowed down in June, driven by price cuts

This photo illustration taken at the Mercator Shopping Mall in Ljubljana on January 28, 2014 shows a shopping cart pushed down the aisle. REUTERS / Srdjan Zivulovic

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London, June 23 (Reuters) – Eurozone business growth has slowed significantly this month – and more than expected – a survey showed Thursday that consumers who are concerned about skyrocketing bills have decided to postpone purchases to stay home and save money.

S&P Global’s Flash Composite Purchasing Managers Index (PMI), which appears to be a good gauge of overall economic health, declined from 54.8 in May to 51.9 in June, below the 54.0 in the Reuters poll and its lowest level since February 2021.

“The eurozone’s economic growth is showing signs of slowing down because the demand for masked by the epidemic is already fading. S&P Global.

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The combined new trading index fell from 53.3 to the 16-month low of 50.0, the dividing line between growth and contraction.

PMI, which includes the block’s strong service industry, fell from 56.1 to 52.8, missing expectations for 55.5 and its weakest reading since April 2021.

Growth in demand for services has dried up, and firms have increased input costs to record highs, forcing some customers to pass that burden. The Input Prices Index rose from 77.4 to 78.3 and increased just twice in the survey’s 24-year history – in March and April.

The Reuters poll found that the European Central Bank is expected to raise its deposit rate by more than zero for the first time in a decade in September, as inflation in the faction reached a record 8.1% last month and may increase further in the coming months. Read More

High prices mean that demand for manufactured goods has fallen rapidly since May 2020, when the coronavirus epidemic took hold, and Headline Factory PMI fell from 54.6 to a two-year low of 52.0. The Reuters poll predicted a modest decline to 53.9.

The index measurement output, which feeds the combined PMI, decreased from 51.3 to 49.3, its first sub-50 in two years.

“The influx of new business has stalled, a drop in demand for goods and a reduction in demand for services from customers who are particularly cash-strapped,” Williamson said.

“At the same time, trade confidence has fallen sharply to levels rarely seen before the epidemic following the region’s economic downturn during 2012, hinting at an impending downturn unless demand is revived.”

Costs are still skyrocketing, and factories that have disrupted supply chains have slashed the purchase of raw materials, suggesting that there will be little improvement if optimism fades anytime soon. The Future Output Index fell from 55.4 to 51.6, the lowest since May 2020.

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Reporting by Jonathan Cable; Edited by Hugh Lawson

Our Standards: Thomson Reuters Trust Principles.

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