Final manufacturing PMI indicates euro area Q2 growth likely at 0.4% QoQ

The flash euro area manufacturing PMI, released last week, increased from 52.2 in May to 52.5 in June, as expected. This indicates that the manufacturing sector expanded at its fastest rate since April last year - taking time to respond to the positives of a weaker euro, structurally lower oil price and easing credit conditions. Looking at the breakdown of the survey, growth in output remained robust, whilst both new orders and new export orders also increased, albeit at a slightly lower rate than in May.

The final manufacturing PMI is likely to confirm the flash estimate of 52.5. Of note, Societe Generale forecasts a revision in the French manufacturing PMI down from the flash estimate, 50.5, to a final of 50.3, following weaker-than-expected manufacturing confidence in the INSEE survey for the same period. Meanwhile, the German manufacturing PMI should confirm the flash estimate of 51.9. Turning to Italy, the bank expects the PMI to remain high; consistent with recent confidence surveys. 

"It is important to note that, if our forecast, the manufacturing PMI suggests growth close to 0.4% QoQ in June. For Q2 15, our GDP growth forecast remains at 0.4% QoQ", according to Societe Generale.