Eurozone Business Activity Stalls in July

Eurozone business activity showed signs of stalling in July, with the composite Purchasing Managers' Index (PMI) falling to 50.1, indicating minimal growth amid a significant downturn in manufacturing, which dropped to a seven-month low of 45.6. The services sector also experienced a decline, with its PMI falling to 51.9, reflecting increased input costs that were not fully passed on to consumers. Particularly concerning is the sharp contraction in Germany, where the PMI plummeted to 48.7, marking a significant deviation from expectations and indicating a downturn in both services and manufacturing. Analysts point to trade tensions and political uncertainty as potential factors contributing to this economic slowdown, especially as German manufacturing output dropped drastically. The overall outlook for the eurozone remains cautious, with expectations for future growth diminishing and employment in manufacturing declining at the fastest rate since December. Policymakers at the European Central Bank may welcome the subdued price increases that could influence their next interest rate decisions.