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Eurozone PMI jumps, signaling 0.3% quarterly GDP growth

The euro-area Composite PMI rose to 52.0 in July, with services returning to growth and optimism increasing as input cost inflation cooled.

Reported · Written up by our desk · Central Banks

The eurozone economy showed renewed momentum at the start of the third quarter, with business activity expanding at its fastest pace in eight months, led by a return to growth in services, according to Action Forex.

S&P Global data cited by Action Forex showed the final Composite PMI climbed to 52.0 in July from 50.0 in June, while the Services PMI rose to 51.7 from 49.4, its highest level in five months. The survey also pointed to stronger increases in output and new orders since November.

Action Forex said the improvement was broad-based, with Germany returning to expansion territory at 51.3 after three months of contraction, while France remained a laggard but moved closer to the 50 threshold. The outlet also linked the strengthening demand to higher business optimism and slower input cost inflation.

The report added that the PMI reading is consistent with around 0.3% quarterly GDP growth, but it cautioned that the outlook remains sensitive to developments in the Middle East. Action Forex noted July’s gains followed a temporary easing in oil prices and geopolitical tensions in June, and said renewed conflict raises risks to both growth and inflation, potentially affecting the ECB’s timing on further policy tightening.

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