Eurozone Economy Shows Signs of Recovery as Business Activity Expands

The Eurozone economy has shown signs of recovery in July, with business activity expanding at its fastest pace in eight months. The final S&P Global Composite PMI rose to 52.0 in July from 50.0 in June, while the Services PMI climbed to 51.7 from 49.4, its highest level in five months.

The improvement was broad-based across the region, with Germany leading the recovery and its Composite PMI returning above 50 for the first time since March. France remained a laggard but showed notable improvement as both services and overall private-sector activity moved closer to the 50 threshold.

Business optimism rose to its highest level since January, supported by improving demand and easing cost pressures. Input cost inflation slowed to its weakest pace since February, providing some relief after months of elevated price pressures.

The survey pointed to around 0.3% quarterly GDP growth, but renewed Middle East tensions and higher oil prices have reintroduced downside risks to growth and upside risks to inflation.