Eurozone PMI Data Reveal Slower Business Growth in July 3/3

Economic data released today indicated that Eurozone business activity growth stalled in July, as moderate expansion in the dominant services sector failed to counterbalance a deeper downturn in manufacturing.

The Eurozone preliminary composite Purchasing Managers’ Index (PMI) dropped to 50.1 in July from 50.9 in June, coming in just above the 50 mark that separates growth from contraction. This result fell short of expectations for an increase to 51.1.

Expectations for the coming year have declined once again, signaling that business managers do not anticipate an imminent recovery.

The services PMI decreased to 51.9 this month from 52.8 in June, missing the anticipated rise to 53.0. Services firms experienced a sharper increase in input costs this month but raised their output prices at a slower rate. The output prices index eased to 53.2 from 53.5, which could be seen as a positive for the European Central Bank (ECB). The ECB held interest rates steady last week following a cut in June but has left the possibility of further action in September open.

The manufacturing PMI fell to a seven-month low of 45.6 from 45.8 in June, disappointing expectations for an increase to 46.0. With demand declining at its fastest pace this year, factories reduced their workforce at the sharpest rate since December, with the employment index dropping to 46.8 from 47.5.