According to S&P Global, the industrial purchasing managers’ index (PMI), which measures the direction of economic development in the euro area, fell to 52.1 in June from 54.6 in May.
“While the June PMI surveys show continued business growth at the end of the second quarter, a sharp slowdown in growth increases the risk that the region will slide into an economic recession in the third quarter,” said S&P’s Global report. on Tuesday.
Inflation in the euro area has accelerated, which according to market observers may weaken consumer confidence and weigh on economic growth. According to the Statistical Center of the European Union, annual inflation in the euro area accelerated to 8.6 percent in June from 8.1 percent in May.
Compared to its US counterpart, the ECB appears to be less aggressive in tightening monetary policy, adding to downward pressure on the common currency.
The ECB ended its bond buying program in June and is ready to raise interest rates in July. However, the government bonds of some member states, including Italy, have risen significantly since the ECB announced its decision to raise interest rates.
The ECB was forced to support some government bonds by introducing an anti-fragmentation mechanism, which inevitably undermines its tightening policy and creates downward pressure on the euro.
Source: ANI / Xinhua
Source: The Nordic Page