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Eurozone PMIs firm, easing stagflation worries for euro outlook

Eurozone’s composite PMI rose to 52.0 in July from 50.0 in June, while services returned to expansion at 51.7.

Reported · Written up by our desk · Central Banks

BNY analyst Geoff Yu said Eurozone PMI data have surprised to the upside, with the composite at an eight month high and services back in expansion, which is helping to cool immediate stagflation fears.

Yu cautioned, however, that the strength is not a clear signal for additional ECB tightening, arguing that another rate hike could shift a tentative recovery toward a policy driven slowdown for the euro and regional assets.

The Eurozone composite PMI came in at 52.0 in July, up from 50.0 in June, marking a return to modest private sector growth at the start of Q3. The services PMI rose to 51.7 from 49.4, ending a three month downtrend.

In the breakdown, output and new orders increased at the fastest pace since last November, with Germany, Italy and Spain improving, while France remained in contraction, and the survey pointed to softer inflationary pressures as input costs and output charges eased further.

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