Germany returned to growth, France's contraction eased, and the rest of the bloc posted its strongest expansion in eight months. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the PMI levels point to quarterly GDP growth around 0.3%, but warned that a volatile geopolitical environment — particularly the re-escalation of the Middle East conflict and rising energy prices — could quickly reverse the improvement.
The European Central Bank held its three key rates steady on July 23, citing high uncertainty driven by energy prices. With output outpacing new export orders, the risk of inventory build-ups looms if external demand fails to recover. The next flash PMI, due in late August, will test whether July's rebound has legs or proves a one-month bounce.
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