Eurozone economic growth deteriorated sharply to a 16-month low in June, according to preliminary PMI data from S&P Global, a US-listed company, reflecting weaker demand growth.
Manufacturing output contracted for the first time in two years and the expansion of service sector activity slowed considerably, particularly in consumer services.
The S&P Global survey found that companies also cut their trade expectations for production in the year ahead to the lowest since October 2020.
“Economic growth is showing signs of flagging as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost-of-living shock and falling business and consumer confidence. “said Chris Williamson, economist at S&P Global. statement, as reported by Bloomberg.
The sluggish demand and deteriorating outlook has been largely blamed on rising costs of living, tighter financial conditions and concerns about energy and supply chains related to the war in Ukraine and disruptions ongoing pandemics.
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The purchasing manager survey continued to show elevated pricing pressures, including a “worrying increase in cost growth in the services sector.” Cooling demand, however, signaled an easing in commodity prices, “providing a tentative hint of an inflation spike in the near future,” Williamson said.
The euro fell against the dollar on Thursday as economic data pointed to heightened prospects of a recession in Europe. Global stock markets faltered after another blow this week, while oil prices fell further.
Yields on government bonds have also fallen, another sign that investors are more worried about the prospect of a recession, eliminating some of the financial difficulties that rising interest rates are weighing on governments.
(with agency contributions)
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