Eurozone Economy Shows Signs of Recovery Amid Geopolitical Uncertainty

The Eurozone economy showed signs of recovery in July as business activity reached an eight-month high. The S&P Global Euro Zone Composite PMI rose to 52.0, above the neutral mark of 50.0, marking the first time since March that activity was expanding.

This growth is largely driven by a rebound in services and a strengthening manufacturing sector. Services new business increased at their fastest pace since November, while factory order growth showed a slight pick-up. However, export orders remained weak, though at a slower rate than before.

Germany recorded its first rise in private sector output since March, with Italy and Spain also showing stronger growth. Spain stood out, posting its best performance in over a year and a half. France continued to contract, albeit at a slower pace, making it the outlier in the region.

The employment situation stabilized in July, ending a six-month run of job losses. Business confidence rose to a five-month high but remains below pre-February levels. Input cost inflation eased to a five-month low and output price inflation slipped to its softest since March, offering some relief to consumers and policymakers.