Eurozone business growth inches up, July PMI shows

London — Growth in eurozone business activity stalled in July as a stuttering expansion in the bloc’s dominant services industry was compounded by a deeper downturn in the manufacturing sector, a survey showed on Monday.

HCOB’s composite purchasing managers’ index (PMI) for the currency union, compiled by S&P Global and seen as a good gauge of overall economic health, fell to 50.2 in July from June’s 50.9.

It barely exceeded the 50 mark that separates growth from contraction, but was a tad above a preliminary estimate of 50.1 and chalked up its fifth consecutive month in positive territory.

“The eurozone’s economy is growing at a snail’s pace in July. Sector-wise, services is not picking up speed like it did earlier in the year, while the industrial slump has continued unabated,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

A final PMI covering the services industry dropped to 51.9 last month from 52.8, matching a preliminary estimate. The manufacturing PMI published last week showed factory activity remained mired in contraction amid a broad-based malaise, with output declining at its fastest pace this year.

With no imminent turnaround is in sight, overall demand across the region fell for a second month — and at a sharper pace than in June. The composite new business index fell to 49.0 from 49.4.

The decline was despite firms raising prices at a slower pace in July than in June. Services inflation — closely monitored by the European Central Bank (ECB) — moderated and the industry’s output prices index fell to 52.9 from 53.5.

That was a low not seen since May 2021, and potentially gives the ECB room to ease policy further.

Having delivered a widely telegraphed rate cut in June, the ECB left its deposit rate at 3.75% last month but is expected to trim it twice more this year, potentially as soon as September, a Reuters poll found.

Reuters