Eurozone PMI Lifted by Summer Optimism, but Risks Remain

The Eurozone's economic sentiment has been on a rollercoaster ride in recent weeks. The June PMI was compiled before the US-Iran memorandum of understanding, so the optimism surrounding that deal wasn't reflected in last month's numbers.

This helped explain the more upbeat reading for July, which showed improvements not just in sentiment but also in output. Both manufacturing and services sectors gained momentum, with new orders and job creation increasing modestly.

However, input and selling price inflation eased in July, indicating ongoing moderation after inflation peaked in the spring.

European Central Bank President Christine Lagarde noted yesterday that we're back to where we were in early June, with downside economic risks resurfacing. She pointed out that the resurgence of conflict in the Middle East has cast a shadow over the economy.