Middle East Conflict Drives Eurozone Manufacturing Growth

Manufacturing activity in China slowed down in July due to weaker demand and higher costs resulting from the ongoing war in the Middle East. The conflict has disrupted shipping through the Strait of Hormuz, a key transit route for energy exports, causing energy prices to surge.

The S&P Global Eurozone Manufacturing PMI rose to 51.9 in July, its highest reading since April, but still below the preliminary estimate of 52.0. A reading above 50.0 indicates growth.

Carsten Brzeski at ING said, 'It's a mixed bag, but with the main conclusion the euro zone economy is more resilient than feared... but we're clearly heading into at least a low growth environment.'

Inflation in the euro zone rose to 2.9% in July from 2.8% a month earlier, adding to the case for another European Central Bank interest rate hike.