The Eurozone purchasing managers' index (PMI), compiled by German bank HCOB in collaboration with S&P Global, fell to 43.4 in June from 44.8 in May.
Eurozone manufacturing activity contracted faster than expected in June as the European Central Bank (ECB) maintained its tight monetary policy.
Survey results released on July 3 showed that manufacturing activities in all four of the Eurozone's largest economies declined in June.
Specifically, the Eurozone Purchasing Managers' Index (PMI), compiled by HCOB (Germany) in collaboration with S&P Global, fell to 43.4 in June from 44.8 in May.
This was also the lowest reading since the COVID-19 pandemic broke out, lower than the previous preliminary estimate of 43.6 and also well below the 50 threshold for growth. The output index also fell to 44.2 - an eight-month low.
This index is part of the composite PMI index to be released on July 5, which is considered an important measure of economic health.
HCOB chief economist Cyrus de la Rubia said there were growing signs that the capital-hungry industrial sector was reacting negatively to the ECB’s decision to raise interest rates, in a bid to bring sky-high inflation down to its 2% target.
The ECB has raised interest rates by a total of 400 basis points in various rounds and is expected to raise them by another 25 basis points this month, which is seen as dampening the purchasing power of heavily indebted consumers and businesses.
Demand weakened at the fastest pace in eight months despite cooling prices for finished goods, prompting some factories to cut staff for the first time since early 2021. The eurozone employment index also fell to 49.8 from 51.5 in the previous month./.
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