Euro Area Services Sector Leads Broad-Based Rebound

The euro area's services sector led a rebound in business activity in July, according to PMI data. The final estimate for July showed an increase in business activity to a five-month high for services and an eight-month high for composite output.

New orders rose at the strongest rate since November, while inflation cooled, leading to a drop in both input cost and output charge inflation. Germany posted its first rise in private sector output since March, with Italy and Spain also seeing stronger growth rates.

The S&P Global report noted that despite the encouraging resilience of the eurozone economy, the business climate is being steered by the changing geopolitical landscape. Business optimism lifted to its highest level since January, driven by improving demand conditions and a slow growth in firms' costs.