Eurozone Business Growth Stalls in July as Recovery Falters

Berlin, 24 Jul (ONA) --- Business activity growth in the eurozone came to a near halt this month (July 2024) as a modest expansion in the dominant services sector failed to counterbalance a more significant decline in manufacturing, according to a survey released today.

HCOB's preliminary composite Purchasing Managers' Index, compiled by S&P Global, dropped to 50.1 this month (July 2024) from June's 50.9, barely above the 50 mark separating growth from contraction and defying expectations in a Reuters poll for an uptick to 51.1.

"The eurozone's flash July PMIs corroborate the message sent by other leading indicators that the recovery is faltering. If leading indicators continue to underwhelm, this may decrease our gross domestic product (GDP) growth forecasts," said Rory Fennessy at Oxford Economics.

The bloc's economy will average 0.7% growth this year (2024) and 1.4% next, according to a Reuters poll earlier this month (July 2024). The region's No. 1 economy, Germany, will expand a meager 0.2% this year (2024) and 1.2% in 2025, the poll showed.

Those German numbers could also be revised down as business activity there unexpectedly contracted this month (July 2024), dragged down by a steep and dramatic fall in manufacturing output, its PMI indicated.

However, German consumer sentiment is set to recover significantly as households' income expectations hit their highest point in over two years due to slightly lower inflation and noticeable wage increases, a survey published jointly by GfK and the Nuremberg Institute for Market Decisions showed.

Gearing up to host the Olympic Games on 26 July 2024, France's dominant services industry received a boost, although the country's manufacturing sector weakened further.

Outside of the eurozone, British business activity picked up this month (July 2024), bolstered by the fastest manufacturing growth in two years and the strongest inflow of new orders since April 2023.

The figures may cheer Prime Minister Keir Starmer's new government – which is targeting faster growth to allow higher public spending – and the Bank of England (BoE) as inflation pressures fell to their lowest in more than three years.

--- Ends/Khalid