The final data published by S&P Global showed that in July, activity in the eurozone private sector slipped into contraction (for the first time since February 2021), which was due to the negative impact of high inflation on demand. Meanwhile, amid growing concerns about future gas supplies, recession risks in Europe and persistently high price pressures, business confidence fell in July to its lowest level since the initial COVID-19 outbreak in the first half of 2020.
The data showed that the Eurozone PMI Composite Output Index fell to 49.9 points in July from 52.0 points in June. A value below 50 points indicates a reduction in activity in the sector. The manufacturing sector was a significant drag on the euro area economy during July as production volumes fell at the fastest rate since May 2020. Services activity continued to rise overall, but growth slowed to its weakest since the Omicron-related disruption at the start of the year.
S&P Global reported that demand for goods and services in the eurozone fell in July, marking the first reduction since February 2021. Excluding reductions seen during the pandemic and in periods of lockdown, the fall in new orders was the strongest in just over nine years. New export orders also declined, recording the biggest drop in just over two years. Meanwhile, the number of backlogs of work decreased for the first time since February 2021, while the growth rate of the number of jobs in the private sector continued to exceed the historical average (since 1998). However, the increase in the workforce was the slowest in 15 months.
Meanwhile, expectations for future production volumes have fallen to their lowest level since the initial quarantine due to COVID-19 in the first half of 2020.