Eurozone economy stalls in July, PMI index hits 5-month low
The eurozone economy showed signs of weakness in July as business activity expanded at its slowest pace in five months, according to the latest HCOB Composite PMI data.
After a promising start to the year, the region’s economic growth has lost momentum, with new orders falling for the second consecutive month. While the service sector continued to grow, it did so at a slower pace, and manufacturing output contracted.
Germany, the eurozone’s largest economy, experienced a decline in business activity for the first time since March. France also saw a slowdown, although it managed to eke out modest growth. Spain and Italy were the only bright spots, but their expansion was insufficient to offset weakness elsewhere.
Employment growth in the eurozone stagnated, and business confidence dipped to a six-month low. While input costs rose at the fastest pace in 14 months, selling price inflation eased.
Countries ranked by Composite PMI Output Index: July
| Spain | 53.4 | 6-month low |
| Italy | 50.3 | 7-month low |
| Germany | 49.1 (flash 48.7) | 4-month low |
| France | 49.1 (flash 49.5) | 3-month high |
Ireland Services will be released 6th August.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, expressed concern over the slowdown in the service sector and its potential impact on the broader economy. He also highlighted the challenges posed by persistent inflation.
“The eurozone’s economy is growing at a snail’s pace in July. Sector-wise, services are not picking up speed like it did earlier in the year, while the industrial slump has continued unabated. Because of this, the HCOB Composite Output PMI is just hovering above the expansion line.” Rubia noted.
“… while the second half of the year started off pretty weak, the PMIs and the official numbers for economic growth in the second quarter were surprisingly good. Given this situation, our 0.7% growth forecast for the year is still conservative.”
Overall, the data suggests that the eurozone economy is facing increasing headwinds, with growth prospects for the remainder of the year looking uncertain.
Attribution: HCOB Eurozone Composite PMI®
