Eurozone private sector activity dropped in July to a five-month low, raising concerns about the region’s economic recovery. The Composite PMI fell to 50.1, signalling near-stagnation in business activity. Services growth slowed, new orders fell, and business confidence hit a six-month low.
Germany’s economic struggles were particularly notable, with the PMI falling to 48.7, indicating contraction, while France saw a less severe contraction with a Composite PMI of 49.5, driven by a return to growth in services due to preparations for the Olympic Games.
The declining private sector activity led to market reactions, with the euro falling against major currencies and eurozone government bond yields decreasing. Eurozone equities also suffered, with the Euro STOXX 50 down 1% and the French CAC 40 falling 1.7%.
Experts suggest that the weakening economic data may prompt the European Central Bank to consider a rate cut in September. The sluggish growth in the eurozone, particularly in Germany, highlights structural issues such as the loss of global market share by German car and machinery producers to competitors in China.
Overall, the decline in private sector activity in the eurozone in July raises concerns about the region’s economic outlook for the second half of the year, as companies struggle with weakening demand and rising input costs. France’s potential recovery in the services sector could be overshadowed by continued challenges in manufacturing and inflation.
Source
Photo credit www.euronews.com
