Little change to the initial estimate, as preluded by the French and German numbers, but this reaffirms that Eurozone manufacturing falls into contraction with the headline reading being a 25-month low. The manufacturing output index also slumped from 49.3 in June to 46.3 in July - its lowest in 26 months. S&P Global notes that:

“Eurozone manufacturing is sinking into an increasingly steep downturn, adding to the region’s recession risks. New orders are already falling at a pace which, excluding pandemic lockdown months, is the sharpest since the debt crisis in 2012, with worse likely to come.

“Production is falling at especially worrying rates in Germany, Italy and France, but is also now in decline in all other surveyed countries except the Netherlands, and even here the rate of growth has slowed sharply.

“Lower than anticipated sales, reflected in accelerating rates of decline of new orders and exports, have led to the largest rise in unsold stocks of finished goods ever recorded by the survey. Increasing numbers of producers are consequently cutting production in line with the deteriorating demand environment, as well as scaling back both their purchases of inputs and hiring of staff.

“One upside to the weakened demand environment is an easing of supply constraints, with the incidence of delays now the lowest since late-2020. This has in turn helped bring price pressures down considerably in the manufacturing sector. The notable exception is energy, where concerns are mounting regarding the impact of gas supply limitations in the months ahead.

“The energy crisis adds to the risks that not only will weaker demand and destocking cause manufacturing production to decline at an increased rate in the coming months, but reduced energy supply will act as an additional drag on the sector.”