A renewed increase in new orders helped the euro area's private sector activity modestly grow for the first time in four months in July, according to flash data from S&P Global published Friday.
The seasonally adjusted S&P Global Flash Eurozone Composite PMI Output Index rose to a five-month high of 51.9 from the previous month's 50, driven by the uptick in new orders, which climbed for the first time in five months and at their fastest pace since April 2023. The preliminary reading comes in above the consensus estimate of 50.3.
The services PMI also hit a five-month high of 51.6, against June's 49.4 and the market forecast of 49.8, reflecting a resurgence in business activity. Meanwhile, the manufacturing PMI edged up to a three-month high of 52, higher than the previous reading of 51.4 and the expected 51.5, amid the sharpest rise in factory output since March 2022.
Regarding the eurozone's two largest economies, Germany returned to growth for the first time in four months, while France's output decline eased. As a whole, the rest of the euro area delivered the fastest growth in eight months.
Business expectations for the year ahead further improved from April's low point to reach a five-month high, though optimism remains weaker than levels seen before the conflict in the Middle East.
"However, whether all this good news can be sustained in the coming months largely depends on the situation in the Middle East. With oil prices on the rise again in recent days and shipping worries escalating, there's a danger that the economy could relapse if inflationary pressures intensify again and supply disruptions, notably for energy, derail this nascent upturn," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.
