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The HCOB Eurozone Manufacturing PMI rose slightly to 49.5 in June, matching and just above expectations of 49.4, and up from May’s 49.4 — marking the highest reading since March 2023 but still below the 50.0 threshold, indicating the sector remains in mild contraction.

The uptick reflects slower declines in new orders and output, with some improvement seen in Spain and Germany offsetting continued weakness in Italy and France. However, subdued demand, high financing costs, and lingering geopolitical uncertainties continue to weigh on overall eurozone factory activity.

Analysts note that while the rise offers tentative signs of stabilization, the PMI’s persistent sub-50 level highlights fragile momentum across the region, underscoring the need for a broader demand recovery and easing financial conditions to sustain a return to growth.

• Unemployment change increased by 11,000 in June, better than expectations of an 18K rise and sharply below May’s 34K increase, suggesting slower deterioration in labor market conditions than feared.
• The unemployment rate held steady at 6.3%, slightly better than the forecasted 6.4% and unchanged from May, reflecting relative stability despite economic headwinds.
• The total number of unemployed reached 2.972 million, up slightly from 2.963M in May, while unadjusted unemployment (n.s.a.) edged down to 2.914 million from 2.919M, indicating seasonal effects helping to offset underlying labor market softness.

Analysts caution that while the figures show resilience in Germany’s labor market, risks remain as weak industrial activity, elevated borrowing costs, and geopolitical uncertainties continue to weigh on hiring prospects in Europe’s largest economy.

The HCOB Germany Manufacturing PMI rose to 49.0 in June, up from 48.3 in May and in line with expectations of 49.0 — indicating a modest easing in the pace of contraction, but still marking the 14th consecutive month below the 50.0 threshold.

The slight improvement reflects less severe declines in output and new orders, but manufacturers continue to struggle with weak domestic demand, soft export orders, and persistent cost pressures, all of which are keeping the sector in contraction.

Analysts note that while the uptick suggests tentative stabilization, Germany’s manufacturing outlook remains fragile, with ongoing uncertainties over eurozone demand, geopolitical tensions, and elevated borrowing costs likely to limit a sustained recovery.

The HCOB France Manufacturing PMI fell to 48.1 in June, down from 49.8 in May, but still slightly above expectations of 47.8 — indicating a return to deeper contraction in the country’s factory sector after approaching stability last month.

The decline reflects weaker new orders and softer output, with manufacturers citing persistent headwinds from subdued domestic demand, elevated financing costs, and geopolitical uncertainties weighing on exports.

Analysts caution that although the reading came in just above forecasts, the sharper drop back into contraction territory underscores fragile momentum in France’s manufacturing recovery, adding to concerns about the eurozone’s patchy industrial landscape.

The HCOB Italy Manufacturing PMI dropped to 48.4 in June, below expectations of 49.5 and down from May’s 49.2, marking the lowest reading since February and signaling an accelerating contraction in Italy’s factory sector.

The weaker index reflects declines in new orders and production, with firms citing ongoing struggles with weak domestic demand, subdued export orders, and elevated borrowing costs. Employment levels also softened, underscoring rising caution among manufacturers amid a fragile economic environment.

Analysts warn that the deterioration in Italy’s PMI contrasts sharply with improvements seen in Spain, highlighting divergent trends within the eurozone’s manufacturing landscape that could complicate regional recovery efforts.

The procure.ch Manufacturing PMI for Switzerland surged to 49.6 in June, far above expectations of 44.2 and sharply higher than May’s 42.1 — marking the strongest reading since early 2023 and bringing the index just below the 50.0 threshold that separates contraction from expansion.

The significant improvement reflects a marked recovery in output and new orders, with Swiss manufacturers reporting stabilizing demand conditions both domestically and across key European export markets. Employment and purchasing activity also strengthened, indicating rising business confidence after a prolonged period of weakness.

Analysts note that while the PMI remains technically in contraction, the jump signals momentum building in Swiss manufacturing, with the sector potentially poised to return to expansion in the coming months if the trend continues.

The HCOB Spain Manufacturing PMI climbed to 51.4 in June, beating expectations of 50.6 and improving from May’s 50.5, marking the highest reading since early 2022 and signaling solid expansion in the country’s factory sector.

The uptick reflects accelerating growth in new orders and output, with firms reporting improving demand conditions both domestically and abroad. Employment and purchasing activity also rose, supporting optimism about the near-term outlook for Spain’s manufacturing industry.

Analysts note that Spain’s resilience stands in contrast to stagnation in much of the eurozone’s manufacturing sector, positioning the country as a relative bright spot in the region’s industrial landscape.

• German CPI (YoY) fell to 2.0% in June, below expectations of 2.2% and down from May’s 2.1%, returning inflation to the European Central Bank’s (ECB) target level for the first time in over two years.
• CPI (MoM) was flat at 0.0%, missing forecasts of +0.2% and cooling from May’s +0.1%, reflecting stagnating monthly price pressures.
• The EU-harmonized HICP (YoY) also slowed to 2.0%, down from 2.1% and below expectations of 2.2%, while HICP (MoM) rose just 0.1%, softer than the expected 0.3% and lower than May’s 0.2%.

The data show disinflation gaining traction in Europe’s largest economy, driven by easing energy and food prices. With German inflation now at the ECB’s target, pressure is likely to mount on policymakers to accelerate rate cuts, although lingering wage growth and core inflation may still temper the pace of monetary easing.

• M3 money supply rose 3.9% YoY in May, just below expectations of 4.0% but up from April’s 3.6%, suggesting modest expansion in euro-area liquidity. The total M3 stock reached €16,919.7 billion, up slightly from €16,901.4B in April.
• Loans to non-financial corporations grew 2.5% YoY, a marginal improvement from April’s 2.4%, indicating slightly firmer credit demand from businesses.
• Private sector loans increased 2.0% YoY, matching expectations and edging up from 1.9% previously, pointing to stable but subdued borrowing activity among households and companies.

The figures reflect gradual normalization in credit conditions, as the ECB’s prolonged tightening cycle slows monetary expansion but hasn’t yet triggered a sharp contraction in lending. Analysts note that sustained weakness in credit growth could weigh on investment and consumption, complicating the ECB’s path to balancing inflation control with economic support.

• Retail sales fell 1.6% MoM in May, sharply missing expectations for a 0.5% gain and reversing April’s -0.6% decline — highlighting continued weakness in household spending across Europe’s largest economy.
• On an annual basis, retail sales rose just 1.6% YoY, well below forecasts of 3.3% and down significantly from April’s 4.6% growth, pointing to waning momentum in consumer demand amid persistent inflation and elevated borrowing costs.

The disappointing figures underscore fragile consumer sentiment in Germany, as high living costs, cautious spending, and uncertain economic prospects weigh on retail activity. Analysts warn that sustained softness in consumption could hinder Germany’s recovery, especially given sluggish industrial performance

Spain’s Gross Domestic Product (GDP) grew 0.6% quarter-over-quarter in Q1 2025, matching expectations but slightly below the previous quarter’s 0.7%. On an annual basis, GDP expanded 2.8% YoY, in line with forecasts but down from 3.3% in Q4 2024, signaling a gradual moderation in economic momentum.

Meanwhile, Producer Price Inflation (PPI) came in at 1.9% YoY in May, unchanged from April. The low producer inflation suggests limited upstream price pressure, supporting a stable pricing environment for businesses despite broader eurozone cost concerns.

France’s Consumer Confidence Index remained unchanged at 88 in June, matching the previous month and slightly below expectations of 89.

The reading reflects continued household caution amid persistent inflation concerns, elevated borrowing costs, and political uncertainty. Confidence remains well below the long-term average of 100, suggesting subdued consumer sentiment that could weigh on domestic demand in the months ahead.