Business activity in the eurozone unexpectedly shrank this month due to an accelerating manufacturing recession and near-stagnant growth in the services sector as higher costs prompted consumers to cut spending.
The S&P Global composite PMI fell to 49.4 points in July from 52 points in June, well below estimates for a drop to 51 points.
“The eurozone economy is expected to contract in the third quarter as business activity eased in July and forward indicators point to the worst to come in the coming months,” said Chris Williamson, chief economist at S&P Global.
“Excluding the lockdown months, July’s contraction is the first for the PMI since June 2013, indicating the economy contracted by 0.1% on a quarterly basis.”
Inflation in the eurozone stood at 8.6% last month, according to official data, while the PMI composite producer price index fell to 63.9 points from 65.3 points in June.
The PMI covering services fell to a 15-month low of 50.6 points in July from 53 points, below forecasts which had called for a drop to 52 points.
The cost of living crisis has kept consumers cautious who have cut back on non-essential spending, so the index of new activity fell to 48.4 points from 51.8 points, the lowest level since February last year.
Manufacturing activity fell this month for the first time in more than two years.
The factory PMI dipped to 49.6 from 52.1 while the manufacturing index stood at 46.1 from 49.3 in June, the lowest since May 2020.
Source: Capital
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