Euro Area June PMI improved slightly, but overall remains stuck in a weak range

Overview

This report is a euro area macro data update published by Goldman Sachs on June 23, 2026, focusing on the latest June flash PMI data for Germany, France, and Spain, as well as changes in euro area price pressures. The core conclusion is that regional PMI improved versus May, but major economies still appear weak, and the preliminary Q2 GDP assessment is broadly unchanged.

Core views

Goldman Sachs believes that euro area data improved at the margin but not enough to confirm a significant strengthening in growth. Germany's PMI declined unexpectedly, with a clear drag from services; France rebounded from extremely weak levels but remained soft; Spain's trade deficit narrowed slightly and hotel overnight stays increased year over year. At the regional level, the recovery in services drove the improvement in the composite PMI, while manufacturing output remained in expansion, though support from inventory building may have weakened in June.

Analysis framework

The report uses a high-frequency macro data tracking approach, observing PMI, manufacturing sales, business sentiment, trade, and tourism data at both the country and regional levels, and combining input and output price indicators to assess growth momentum and inflation pressures.

Methodology notes

• Macro activity trackingPMI diffusion index framework

  PMI uses 50 as the boom-bust line; below 50 usually indicates contraction in activity, while above 50 usually indicates expansion in activity.

  The report compares month-over-month changes in the composite PMI, services PMI, and manufacturing output component to assess short-term growth momentum in the euro area and its major member states.

• Business sentiment surveyINSEE business sentiment indicator

  Standard deviation from the long-term average can be used to measure the strength or weakness of French business confidence relative to historical levels.

  France's INSEE business sentiment indicator was broadly unchanged in June and remained about 0.8 standard deviations below its long-term average, indicating that French business confidence is still weak.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Euro area macroeconomy

  Core research subject

  Strengths

  The regional composite PMI improved versus May, the services component recovered, and manufacturing output remained in expansion territory.

  Weaknesses

  The composite PMI remains below 50, indicating that overall activity is still weak, and the preliminary Q2 GDP assessment is broadly unchanged.

  Comparison

  Compared with May, the regional picture improved in June; but relative to the expansion threshold, the overall economy has still not returned to a solid expansion state.

  Risks

  If the recovery in services does not continue or support from manufacturing inventories fades, the improvement in growth may be difficult to sustain.

• German economy

  Data contribution from a major member state

  Strengths

  Manufacturing was relatively more resilient, with the May flash estimate for manufacturing sales rising 2.7% month over month.

  Weaknesses

  The composite PMI fell to 48.0 in June, with a clear drag from services.

  Comparison

  Germany performed weaker than the region's overall direction of improvement and was the main negative factor in this data release.

  Risks

  Recent revisions to the flash estimate for manufacturing sales have been large, and weakness in services could weigh on subsequent growth.

• French economy

  Data contribution from a major member state

  Strengths

  The composite PMI rebounded from extremely weak levels, and the services activity index rose 3.1 points.

  Weaknesses

  The composite PMI was only 47.6, and INSEE business sentiment remained about 0.8 standard deviations below the long-term average.

  Comparison

  France improved from previously very weak levels, but the absolute reading remained below the overall euro area level.

  Risks

  The rebound may have been affected by calendar effects, and although price plans slowed month over month, they remained elevated in manufacturing and retail.

• Spanish economy

  Supplementary member-state data

  Strengths

  The goods trade deficit narrowed slightly in April, and hotel overnight stays rose about 3.7% year over year in May, supported by non-resident arrivals.

  Weaknesses

  The report provides limited data on Spain, making it difficult to independently assess overall growth momentum.

  Comparison

  Compared with weak PMI readings in Germany and France, Spain's tourism-related data were more supportive.

  Risks

  If tourism demand, external demand, or trade conditions weaken, the current positive contribution may be reduced.

Key data

• Euro area composite PMI49.5June reading, above May's 48.5 and slightly above expectations.
• Euro area services PMI48.9Rose 1.2 points in June and was the main driver of the improvement in the regional composite PMI.
• Euro area manufacturing output51.2Broadly unchanged in June and still in expansion territory; the tailwind from inventory building may have weakened.
• Germany composite PMI48.0Fell 0.8 points in June, below expectations, with the weakness mainly driven by services.
• Germany manufacturing sales+2.7% momThe May flash estimate showed month-over-month growth, supporting the signal that manufacturing was broadly resilient in Q2, though recent revisions to flash estimates have been large.
• France composite PMI47.6Rebounded in June from very weak levels but remained soft, with the improvement possibly partly affected by calendar effects.
• France services activity index47.4Rose 3.1 points in June, with services showing the most visible improvement.
• France INSEE business sentiment indicatorabout 0.8 standard deviations below the long-term averageBroadly unchanged in June; in February it was about 0.4 standard deviations below the long-term average.
• Spain hotel overnight staysabout +3.7% yoyHotel overnight stays increased in May, supported by non-resident arrivals.
• Euro area price pressuresEased month over monthInput and output price pressures eased across sectors and regions, but remained above pre-Middle East conflict levels.

Impact & implications

The implication of the data mix for the euro area growth outlook is moderately mild: the improvement in PMI reduces the risk of further deterioration in growth, but readings remain below 50, indicating that demand and services activity have not yet clearly recovered. Easing price pressures are helpful for the inflation path, but they remain above pre-conflict levels, which may limit further strengthening in expectations for policy easing.

Risks

• The euro area composite PMI remains below 50, and the marginal improvement may be insufficient to support a clear rebound in growth.
• Weakness in Germany's services sector may continue and offset support from manufacturing resilience.
• The rebound in France's PMI may partly reflect calendar effects, and its sustainability still needs to be verified.
• The tailwind from inventory building for manufacturing may already have weakened, creating downside risk to manufacturing momentum.
• Although price pressures have eased, they remain above pre-Middle East conflict levels, and inflation risks have not fully disappeared.

What to watch

• Whether the final June flash PMI readings are revised, and whether the composite PMI can return above 50.
• Whether Germany's services PMI continues to drag, and whether the May flash estimate for manufacturing sales is revised significantly.
• Whether France's INSEE business sentiment indicator and services activity can continue to improve.
• Whether euro area input and output price pressures continue to fall back to pre-conflict levels.
• Whether Spain's hotel overnight stays and non-resident arrivals continue to support services exports.
• Whether Goldman Sachs' subsequent update to euro area Q2 GDP shifts from 'broadly unchanged' to an upward or downward revision.