The rise of the European PMI index in June shouldn't affect the ECB's prudence (ING)

In a note published today, analysts at ING Bank indicate that the rise in the PMI Composite Market Index of the Eurozone from 51.8 to 52.1 in June marks the sharpest increase of 2019, but the continued contraction of the manufacturing sector justifies a high state of alert by the ECB.

"After disappointing PMIs at the beginning of the year, the cautious improvements in May and June can be seen as a positive sign. The interpretation is probably as follows: growth is still weak at the moment, but the Eurozone is not approaching recession."

"Another analysis following the June PMI figures: the difference between services and the manufacturing industry is constantly increasing. The big question remains how long this can last, as employment growth in the manufacturing sector has declined despite a slight increase in June. Without a strong labour market, growth in the service sector could also slow down. However, this is not expected to happen in the coming months, as overall job creation remains modest."

"For the ECB, this PMI will certainly have been an encouraging sign, but as the weakness of the manufacturing sector remains significant, it is unlikely that these results will have an impact on Frankfurt's high alert level. Next week's data on inflation and the G20 could have a greater impact, which could lead the ECB to act as early as July."