According to the flash report from HCOB, business activity in the private sector of the eurozone unexpectedly declined in July, reaching a 5-month low. New orders fell for the second month running and business confidence dropped to a 6-month low, leading firms to halt a spell of hiring.
The Eurozone Composite PMI Output Index fell in July to 50.1 points from 50.9 points in June. An index value above 50 points indicates an expansion of activity in the sector. Economists had expected the index to rise to 51.1 points. The services PMI fell to 51.9 (4-month low) from 52.8 in June, while the manufacturing PMI fell to 45.6 points (7-month low) from 45.8 points. Economists had expected the services PMI to rise to 53.0 points and the manufacturing PMI to reach 46.1 points.
HCOB said that new orders in the private sector declined again in July. The pace of reduction quickened slightly from that seen in June, but remained only modest nonetheless. Meanwhile, new export orders declined for the twenty-ninth consecutive month, and at a solid pace that was fractionally faster than that registered in June. As for the outlook for business activity, business confidence dipped to a six-month low and came in just below the series average. The data also showed that private sector employment remained unchanged in July, interrupting a six-month increase. Meanwhile, backlogs of work continued to decrease at a solid pace. Input prices increased sharply in July, reaching a 3-month high. Output prices increased at a softer pace as falling demand limited company pricing power. Charges rose at a modest pace that was the slowest since last October.