Eurozone PMI data show slowdown in business growth in July

Economic data released today showed that Eurozone business activity growth stalled in July as moderate expansion in the bloc’s dominant services industry failed to offset a deeper downturn in manufacturing sector.

Eurozone preliminary composite Purchasing Managers’ Index (PMI), dropped to 50.1 in July, from June’s 50.9, barely above the 50 mark that separates growth from contraction and disappointing expectations for rise to 51.1.

Expectations about the coming year declined again, suggesting business managers do not expect an imminent turnaround.

The services PMI fell to 51.9 this month from 52.8 in June and well below consensus for an increase to 53.0.
Services firms faced a steeper increase in input costs this month but raised their prices charged at a shallower rate. The output prices index eased to 53.2 from 53.5 that should be a positive signal for the European Central Bank which left interest rates on hold last week, after first cut in June, but left the door open for possible action in September.

The manufacturing PMI dipped to a seven-month low of 45.6 from June’s 45.8 and disappointed expectations for increase to 46.0

With demand falling at its fastest pace this year, factories reduced headcount at the sharpest rate since December. The employment index fell to 46.8 from 47.5.