• Prior 52.0
  • Manufacturing PMI 42.7 vs 43.5 expected
  • Prior 43.4
  • Composite PMI 48.9 vs 49.7 expected
  • Prior 49.9

On the balance of things, the overall numbers here don't seem as dire as what the German PMI data earlier suggests. However, the manufacturing sector is still well in recession and services activity is unable to offset that to carry the euro area to start Q3. Business activity is now sitting in contraction territory and that will ignite recession worries for the second-half of the year. HCOB notes that:

"Manufacturing continues to be the Achilles heel of the eurozone. Producers have cut their output again at an accelerated pace in July, while the services sector’s activity is still expanding, though at a much slower rate than earlier in the year."

"The eurozone economy will likely move further into contraction territory in the months ahead, as the services sector keeps losing steam. Further adding to the gloomy outlook is the fact that both the new business and outstanding business PMI indices for services have fallen into shrinking territory for the first time since the turn of the year."

"These trends are particularly pronounced in the manufacturing sector, suggesting that the slump here is likely to continue as the second half of 2023 progresses."

"The HCOB PMI fell short of the Bloomberg consensus whose analysts were forecasting a slight slowdown in the decline for manufacturing and a more resilient picture for services."

"The latest PMI reading is not going to please ECB officials as prices in the private sector are still creeping up, led solely by the substantial services sector. Thus, ECB president Christine Lagarde will certainly stick to her guns and hike interest rates by 25 bp at the next monetary meeting at the end of July."