"The slowdown will put pressure on policy makers at the European Central Bank to do more to prevent the recovery from stalling, and we will no doubt see more calls for full-scale quantitative easing to be implemented"
-Chris Williamson, Markit's chief economist
Mixed news came from Europe on Tuesday, with Spanish manufacturing rising more than expected, while factory activity in Italy declined somewhat. Spain's manufacturing sector continues to expand for the sixth consecutive month in May and at more rapid pace than initially was expected, adding to evidence that economic growth accelerated in the second three-month period. The corresponding index climbed to 52.9 from 52.7 in April, moving further away from the 50-threshold, which separates growth from contraction in activity. Moreover, the survey results signal that growth is likely to keep the pace in the coming months, with a number of new orders rising boosted by an export increase. Meanwhile, growth in the Italian manufacturing sector slowed fro the second straight month, underscoring economic recovery remains slow and fragile. The Markit/ADACI PMI came in at 52.6 down from 53.2 seen a month earlier and 54.0 in April.
Overall, the Eurozone's manufacturing sector shrank in three months to June, with the headline gauge falling to 51.8 in June down from 52.2 in May. Activity slowed across European core countries, including Germany, Austria and the Netherlands. France and Greece saw their manufacturing activity contracting.
© Dukascopy Bank SA