Eurozone business activity hits 11-month high in July

Eurozone business activity accelerated faster than forecast this month, supported by a solid improvement in the bloc’s dominant services industry and with manufacturing showing further signs of recovery, a survey showed this week.

HCOB’s preliminary composite eurozone Purchasing Managers’ Index, compiled by S&P Global and seen as a good guide to growth, rose to an 11-month high of 51.0 points from 50.6 in June.

That was above the 50.0 mark separating growth from contraction and above expectations for 50.8 in a Reuters poll.

“The eurozone economy appears to be gradually regaining momentum. The recession in the manufacturing sector is coming to an end, and growth in the services sector accelerated slightly in July,” said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

For the first time in over a year, overall demand did not decline, though there was no expansion. The composite new business index came in bang on 50, its highest level since May 2024.

The services PMI rose to 51.2 from 50.5, exceeding the Reuters poll forecast for a more modest lift to 50.7.

Inflationary pressures eased with the services input and output prices indexes falling. The input prices index fell to a nine-month low of 56.7 from 58.1.

Inflation was at 2.0 per cent in June, official data showed earlier this month, right where the European Central Bank wants it.

The ECB will hold policy steady later on Thursday, according to all 84 economists surveyed in a Reuters poll, while a small majority expect one more interest rate cut – most likely in September.

A manufacturing PMI, which has been sub-50 for three years, climbed to 49.8 from June’s 49.5, just ahead of the poll estimate for 49.7, while an index measuring output dipped slightly to 50.7 from 50.8.

Although some of that activity was driven by completing past orders, factories did so at the slowest rate in around three years. The backlogs of work index rose to 49.0 from 47.1.