Eurozone: Private Sector Output Down, Price Pressures Intensified

04 July 2008

HENLEY-ON-THAMES, UK: The Royal Bank of Scotland / Markit Eurozone Composite Output Index fell from 51.1 in May to 49.3 in June, signalling the first decline in private sector output (albeit only slight) since July 2003. Minor contractions were recorded for both manufacturing and services.

The report covers the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the fifteen nation euro currency area.  

Key findings for June 2008:

  • Output fell in both Spain and Italy for the sixth successive month, with Spain seeing by far the stronger rate of decline as its Output Index dropped sharply to a new record low. The rate of decline also gathered pace in Italy, showing the largest monthly contraction since May 2005.
  • France saw output fall for the first time since June 2003. Of the big-four euro nations, only Germany recorded growth of output, seeing the rate of increase slip to a three month low but holding close to the average seen so far this year.
  • New business fell for the second month running, and the rate of decline sank to the steepest since June 2003. Manufacturers saw a faster rate of new orders loss than services providers.
  • Of the big-four countries, only Germany saw any growth of new business. Spain led the downturn, seeing a record decline, followed by Italy, where new business fell at the fastest rate since November 2001. France meanwhile saw new business turn down for the first time since July 2003.
  • Employment growth slowed to approach stagnation. Modest growth in the service sector was partly offset by a small decline in manufacturing.
  • Employment rose at the weakest rate for 16 months in Germany and fell in the other big-four countries, led by a record drop in Spain. Only marginal rates of job losses were seen in Italy and France.
  • Average input cost inflation jumped to the highest since October 2000, as rates accelerated in both manufacturing and services. Rates of inflation leapt higher in all big-four countries, rising at the fastest rates since late-2000 in both Germany and Spain and at the fastest rate since October 2004 in France.
The Indexes are based on the results of surveys carried out in Germany, France, Spain, Italy, Ireland, Greece, Austria and the Netherlands, which together account for an estimated 92% of Eurozone manufacturing activity.
The Eurozone Manufacturing and Services PMIs (Purchasing Managers' Indexes) are produced for The Royal Bank of Scotland by Markit Economics. For further information on the PMIs click here.

Data sourced from Markit Economics (UK); additional content by WARC staff