Eurozone Manufacturing Stuck in Decline

PMI Shows Continued Contraction in July

Key Points

• Eurozone manufacturing PMI remains in contraction for July.
• Broad-based malaise affects all sectors.
• Overall eurozone economy expected to grow 0.7% this year.
• Manufacturing downturn suggests worst may be over.

Eurozone manufacturing activity contracted further in July, as indicated by the latest Purchasing Managers Index (PMI) released by S&P Global. The PMI stood at 49.8 in July, down from 50.2 in June. This marks the seventh consecutive month of contraction in the eurozone manufacturing sector.

The PMI data shows that new orders, production, and employment all declined in July. New orders fell at the fastest pace since October 2008, suggesting that demand for eurozone manufactured goods is weakening.

The contraction in eurozone manufacturing is being driven by a number of factors, including the war in Ukraine, rising energy prices, and supply chain disruptions. The conflict in Ukraine has disrupted trade and led to higher input costs for businesses. The rising cost of energy is also putting pressure on businesses, as they struggle to cover their expenses.

The eurozone economy is expected to grow by 0.7% this year, according to a recent Reuters poll. However, the contraction in manufacturing is a sign that the economy is facing headwinds. If manufacturing activity continues to decline, it could lead to slower growth in the overall economy.