Economic Buzz: Euro area economic activity remained broadly resilient, ECB members noted

European Central Bank (ECB) released account of the monetary policy meeting of the central bank held in Frankfurt last month. ECB Governing Council members noted that euro area economic activity had continued to grow and remained broadly resilient, notwithstanding the continuing headwinds from the conflict in the Middle East and the associated energy shock, as well as ongoing elevated uncertainty. Incoming high-frequency indicators suggested that the economy remained broadly in line with the June projections. It was considered that the euro area economy was more resilient than had been expected, while the conditions did not appear to be in place for excessive aggregate demand.

Members further opined that recent incoming information suggested that the short-term outlook had improved slightly since the June projections. While the euro area composite PMI had declined in the second quarter compared with the first, it had edged up in June. Manufacturing output continued to expand, with the PMI manufacturing component broadly stable in June and higher on average in the second quarter compared with the first. Manufacturing activity appeared to have been supported by higher defence spending as well as by firms building up stocks to guard against potential supply chain risks. Surveys also suggested that activity in the services sector had partially recovered, after weakening markedly in the immediate aftermath of the shock caused by the Middle East conflict.

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