The eurozone's manufacturing sector posted its strongest output growth in 52 months during July, pushing the headline PMI to 52.0 from 51.4 in June and surpassing the 51.3 consensus forecast. The manufacturing output index jumped to 53.0 from 51.7, marking the fastest pace since March 2022, according to S&P Global's flash estimate released on July 24.
The composite PMI climbed to 51.9 from June's 50.0, its highest level in five months and well above the 50.3 poll expectation, signaling the first expansion in overall business activity since March. Services rebounded to 51.6 from a contractionary 49.4, snapping three months of decline.
New orders grew for the first time since February, expanding at the quickest rate since April 2023. Yet export orders — which include intra-eurozone trade — continued to fall, albeit at the slowest pace since March 2022. The divergence leaves factories producing more while foreign demand remains subdued.
Supply-chain pressures eased enough for manufacturers to increase input inventories for the first time in three-and-a-half years, even as purchasing activity stayed broadly flat. Input cost inflation slowed, and output price inflation also eased, though cost pressures remained elevated.
Employment signals were mixed. Eurozone staffing levels rose marginally, the first increase after months of job shedding, but manufacturing firms kept cutting headcount, tempering the overall gain.