Euro area June Flash PMIs end Q2 on a strong note

Euro area "flash" composite PMIs came in stronger in June, edging up to 54.1, the highest print in four years, while manufacturing confidence grew up 0.2 point to 53.5.. 

In both sectors, better output trends supported the June increase, while new orders eased slightly. Business expectations were also down to a six-month low and signalled that weaker forward-looking components were related to mounting uncertainty regarding the outcome of the Greek crisis. 

German composite PMIs surprised to the upside in June, rebounding to 54.0. Both sectors recovered but as for the euro area, it was mainly due to stronger output while new orders declined slightly. Overall, PMIs are in line a 0.5% q/q GDP growth rate in Q2. 

French PMIs also came stronger than expected, and this second consecutive monthly improvement gave hope for a sustained upturn in confidence and activity. Our PMI-based GDP indicator increased in June, but still remained at 0.1% q/q. 

Finally, confidence in the periphery should remain strong in June, although dropping from May. "Manufacturing PMI edged down in Spain, Italy and Ireland, by about 0.7 point on average. The services sector should slow down as well, dropping by 1.2 points, still hovering around multi-year highs", estimates Barclays.