This morning we found out that Euro-area business activity shrank less than anticipated in June (Services up/beat, Manufacturing down/miss).

S&P Global’s Composite PMI rose to 49.5 from 48.5, topping estimates but remaining below the 50 mark that indicates growth.

"The eurozone economy is showing enough resilience to just about stay out of recession. "

However, the UK’s economy contracted for a second consecutive month (both Services and Manufacturing lower), with its PMI slipping to a 14-month low.

"A disappointing June ‘flash’ PMI indicates that the economy contracted for a second successive month, albeit at only a 0.1% rate and merely flat-lining over the second quarter as a whole."

And despite the recent weakness in 'hard' data, expectations were for an incrementally positive rise in the US Composite PMI in preliminary June data (with Services up and Manufacturing down).

Forecasters under-estimated the US economic resilience with both Manufacturing (55.7 vs 54.6 exp vs 55.1 prior) and Services (51.3 vs 51.1 exp vs 50.3 prior) both rising and beating expectations.

Manufacturing is at a 49-month high and Services at a 4-month high with a positive trend over the past 3 months...

Source: Bloomberg

“Brighter news out of the Middle East has helped restore some confidence among US businesses in June", said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, "though the overall rate of economic growth signalled by the flash PMI survey remains relatively sluggish compared to that seen earlier in the year in the lead up to the conflict."

The survey signals that current output levels are consistent with the economy struggling to grow much faster than a 1% annualized rate in the second quarter.

The service sector continues to grow at an especially subdued pace, reflecting push-back from customers over high prices amid low levels of consumer confidence in particular.

While there is better news from the manufacturing sector, Williamson remains concerned that factory growth continues to be temporarily buoyed by inventory building amid supply fears.

Supply delays grew more widespread in June.

Williamson says that “most worrying was the further fall in employment, notably in the manufacturing sector."

Factory job cuts are running at the highest since 2009 if the pandemic is excluded, reflecting concerns over the sustainability of the recent upturn in demand alongside worries over the escalating cost of raw materials.

However, while still running at one of the highest rates seen over the past four years, input cost inflation has shown sign of cooling in June thanks in part to the lower energy prices seen at the tail end of the survey data collection period.