The Eurozone economy continued to show minimal growth in June as manufacturing output gains were largely offset by persistent weakness in the services sector, according to flash PMI data released Monday.
While Germany showed tentative signs of improvement, France extended its contraction for a tenth consecutive month, highlighting the region’s uneven recovery trajectory.
Key Takeaways from June Flash PMI Reports
- Eurozone Composite PMI held steady at 50.2, unchanged from May, maintaining the streak of marginal growth above the 50.0 expansion threshold for six consecutive months
- German business activity returned to growth at 50.4 (May: 48.5), driven by manufacturing strength with production hitting a 39-month high at 52.6
- French economic activity declined further to 48.5 (May: 49.3), marking a two-month low as both manufacturing and services sectors contracted
- Manufacturing showed divergent trends across the region, with Eurozone manufacturing PMI remaining unchanged at 49.4, still in contraction territory despite four months of production growth
- Services sector stabilized at 50.0 for the Eurozone after falling into contraction in May, while employment rose marginally across the region
- Input cost inflation eased for the fourth consecutive month to its weakest pace since November, though output prices rose at a slightly faster rate than May
Germany’s tentative recovery offers some optimism, with manufacturers reporting their strongest new order growth in over three years. However, analysts caution that the improvement may be partially attributed to companies drawing down inventories rather than underlying demand strength. The coming months will likely prove crucial in determining whether this momentum can be sustained.
Link to official German HCOB Flash PMI Report (June 2025)
France’s continued deterioration presents a more concerning picture, with the economy now contracting for ten consecutive months. The broad-based nature of the decline, affecting both manufacturing and services, suggests deeper structural challenges that may require policy intervention.
Link to official French HCOB Flash PMI Report (June 2025)
Business confidence across the Eurozone improved to its highest level since January, though sentiment remains below historical averages. This modest optimism, combined with easing input cost pressures, could provide some support for economic activity in the second half of the year, though the path forward remains highly uncertain given ongoing geopolitical tensions and policy uncertainties.
Link to official Eurozone HCOB Flash PMI Report (June 2025)
Market Reactions
Euro vs. Major Currencies: 5-min
The mixed PMI results triggered modest volatility in EUR currency pairs during the Monday morning release window. The Euro showed a selective response, gaining ground primarily against higher-yielding currencies while struggling against safe-haven assets.
EUR/JPY emerged as the strongest performer with a +0.35% gain, likely reflecting the contrast between Europe’s stabilizing growth outlook and Japan’s ongoing economic challenges. The Euro also advanced +0.30% against the New Zealand dollar, suggesting investors may be positioning for divergent monetary policy paths.
However, the single currency’s reaction was more muted against traditional European trading partners. EUR/CHF declined -0.13%, possibly reflecting Switzerland’s appeal as a regional safe-haven, while EUR/CAD lost -0.06% as commodity currencies showed relative resilience.
