Eurozone Markit flash manufacturing PMI inches higher in June

Eurozone’s manufacturing sector bounced surprisingly in June on slight support from the global economy, but the counter political uncertainty in the entire euro area has sparked more of a disappointment, driving down overall business growth in the economy.

Market flash manufacturing Purchasing Managers’ Index (PMI) rose to 52.6 in June, from 51.5 in May and well above market anticipation of 51.3. However, the composite PMI fell to a 17-month low of 52.8 from May's 53.1. A Reuters poll had predicted a more modest dip to 53.0.

"While demand is just about growing strong enough to generate employment, it's not strong enough to give firms pricing power," said Chris Williamson, Chief Economist, Markit.

Moreover, the business expectations index fell to 61.9 from 62.8, its lowest reading in almost a year. A sub-index of the factory PMI, measuring output was 53.8, up from 52.4. Williamson said the PMIs point to second-quarter growth of 0.4 percent, slightly faster than the 0.3 percent predicted in a Reuters poll earlier this month. The economy expanded 0.6 percent in the first quarter.

Meanwhile, the output price index fell further below the 50 mark that separates growth from contraction, coming in at 49.2. The service sector PMI slumped to 52.4 from 53.3, below even the lowest forecast in a Reuters poll.

Widespread uncertainty hovers over the European Union. Labor unions in France are out on a protest since early March, 2016, demanding reforms in labor policy, while Britain, which is outside the currency bloc, is holding a referendum on whether to leave the wider European Union.