Economic Buzz: Eurozone manufacturing remains in expansion despite easing PMI

The eurozone manufacturing sector remained in expansion territory, supported by higher production and a modest improvement in demand, although supply chain disruptions and elevated cost pressures continued to weigh on businesses.

The S&P Global Eurozone Manufacturing PMI eased to 51.4 from 51.6 but remained above the 50.0 threshold, signalling continued expansion in manufacturing activity.

Production strengthened, while new orders returned to growth after stagnating in the previous survey period. Export demand, however, remained weak. Among the major eurozone economies, only Spain and France recorded a decline in manufacturing output.

Supply chain conditions remained strained, although supplier delivery performance improved to a three-month high. Manufacturers reduced purchases and relied on existing inventories to support production, while backlogs continued to decline despite further reductions in employment.

Inflationary pressures showed signs of easing. Input cost inflation slowed to its weakest level since March, while output price inflation eased to a three-month low, indicating some relief in pricing pressures.

Business sentiment improved to a four-month high, recovering from the 17-month low recorded in April. However, confidence remained below the long-term average, reflecting continued uncertainty over demand and supply conditions.

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