Economic Buzz: Eurozone output growth at 11-month high as new orders stabilise

Provisional PMI survey data for July pointed to a further increase in business activity in the Eurozone private sector during the month, with the pace of expansion quickening to the fastest for almost a year amid a stabilization of new orders. Employment also increased modestly again at the start of the second half of 2025, but business confidence dipped slightly. The pace of input cost inflation eased, while companies raised their output prices at the same pace as in June.

The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses and compiled by S&P Global, rose to 51.0 in July from 50.6 in June.

The latest reading signalled a seventh consecutive monthly increase in business activity across the euro area. Although modest, the pace of growth quickened for the second month running and was the sharpest since August last year.

Output increased across both the manufacturing and services sectors, but for the first time in four months the services category posted the stronger pace of growth as the rate of expansion quickened to the fastest since January. Meanwhile, manufacturing production rose marginally, and at a fractionally slower pace than in June.

July data pointed to a stabilisation of new orders, thereby ending a 13-month sequence of contraction. Services new business increased for the first time in six months, but this was cancelled out by a renewed fall in manufacturing new orders. While total new business stabilised, new export orders (which include intra-Eurozone trade) decreased again.

Higher activity requirements and a stabilisation of new orders encouraged companies in the Eurozone to raise their staffing levels again in July, extending the current period of job creation to five months.

Continuing the recent trend, the pace of reduction in manufacturing purchasing activity eased in July. After business sentiment hit an 11-month high in June, confidence dipped slightly in July. As such, optimism remained weaker than the series average.

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