Eurozone Economic Sentiment Improves, US Consumption Gains Momentum
The Eurozone composite PMI rose to 49.5 in June, nearing the 50-point growth threshold, while US household spending increased 0.3% in May, with disposable income up 0.7%.
Business sentiment in the Eurozone showed its first improvement since the start of the US-Iran conflict, according to preliminary data. The composite PMI increased from 48.5 to 49.5 points in June, approaching the 50-point mark that separates growth from contraction. The improvement was mainly driven by the services sector, although its PMI remained in pessimistic territory at 48.9, and demand for services continued to weaken. Manufacturing optimism edged down to 51.3, but new orders returned to moderate growth after a decline in May. The survey also indicated a significant slowdown in both cost and price increases. With oil prices falling in global markets, Eurozone consumer sentiment improved for the first time in four months.
In the US, real household spending rose by 0.3% in May after no change in April. Demand increased for both goods and services, with durables posting the largest monthly gain. Year-on-year, spending was up 2.1%. Disposable income increased by 0.7% in May, the fastest growth since last spring, and was 4.1% higher than a year ago. Household purchasing power improved for the first time in four months, as real income grew after declines in the previous three months. Due to accelerating inflation, households saved less, with the savings rate falling to 3% of disposable income, a historically low level. Fuel prices in the US have been falling since late May, which is moderating inflation and could boost purchasing power.
