Euro area PMIs show private sector nearly stagnated in July

24th Jul 2024 08:53

(Sharecast News) - Activity in the euro area's private sector nearly stalled by surprise in July, the results of two closely followed surveys showed, with growth in France and Germany underperforming.

S&P Global's manufacturing sector purchasing managers index dropped from a reading of 46.1 for June to 45.3 in July (consensus: 46.1).

A separate PMI for services meanwhile fell from 52.8 to 51.9 (consensus: 53.0).

The PMI for the combined output from the two sectors meanwhile slipped from 50.9 to 50.1.

According to the survey compiler, new orders registered a second consecutive month of decline while business confidence plumbed a six month low, prompting companies to stop the hiring that had begun at the start of the year.

Input cost inflation meanwhile accelerated.

"Is this the summer lull? It feels a bit like it as the Eurozone economy barely moved in July, according to the HCOB Flash Eurozone PMI," said Dr.Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"[...] According to our GDP Nowcast, growth in the third quarter is still on the cards, however.

"[...] Our conclusion is that while a September rate cut will most probably be exercised, it will be much trickier to follow this path in the months thereafter, unless the downturn morphs into a deep recession."