Economic activity in the eurozone contracted more sharply in July, according to the PMI index from business information company S&P Global. Lower manufacturing output weighed heavily on activity.
In July, the PMI index stood at 48.9, compared with 49.9 in June. A value below 50 means a contraction. This was the lowest level since November and below the expectations of economists surveyed by Bloomberg.
The main drag on the index was manufacturing which dwindled against a backdrop of high inflation and falling demand with a score of 42.7. This is the lowest level since the Covid-19 pandemic started three years ago.
The services sector continues to grow, but more slowly than at the start of the year. The PMI index stood at 51.1 – the lowest level for six months.
"The eurozone economy is likely to continue contracting in the months ahead," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. He forecasts the malaise in manufacturing to continue into the second half of 2023 and warns that the services sector is also continuing to lose momentum. Hamburg Commercial Bank collaborated on the PMI survey.
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In France (PMI of 46.6), the economy saw the sharpest contraction in more than two and a half years. As for Germany (48.3), this is the lowest level for eight months, while June (50.6) still saw a slight increase.
In the UK, growth is holding steady at 50.7, but the situation is deteriorating there too. The services sector (51.5) is offsetting the contraction in manufacturing (45.0).
