The slowdown in business activity in the Eurozone, which was weighed down by the recession in manufacturing and the marginal resilience shown by the services sector in June, creates a new dilemma in terms of monetary policy-making for the ECB.

The HCOB PMI slipped to a five-month low in June to 50.3 from 52.8 in May.

Apart from the drop itself, the other problematic point is that it only marginally exceeds 50 points, the border between growth and recession.

The data shows – based on a best-case scenario – that the bloc’s economy has stagnated, following a recession in the previous two quarters.

They also show little hope of recovery in the near term, although summer bookings give hope that the tourism industry can provide a short-term boost to growth, a Reuters analysis notes.

“This conflicts with the recovery of the economy in the coming months, which many expectsaid economist Christoph Weil.

“We see confirmation of our forecast that the Eurozone economy will contract again in the second quarter of the year,” he noted.

“Interest rate hikes of 400 basis points so far are gradually slowing the economy“, he added.

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