Business growth in the Eurozone slightly increased in July, according to PMI data, although the pace remained relatively sluggish.
In July 2025, the HCOB Eurozone Composite Purchasing Managers' Index (PMI) showed a modest increase, indicating a slightly faster pace of business activity in the eurozone compared to June. The index rose to 50.9 from 50.6, just above the 50.0 threshold that separates expansion from contraction[1][2][3].
Detailed findings reveal that services sector activity expanded at a slightly faster rate in July, with the sector's PMI climbing to 51.0 from 50.5 in June[1][3]. On the other hand, the manufacturing sector continued near stabilization, with a PMI of 49.8 in July, an improvement from 49.5 in June, although still slightly below 50[3].
Demand, measured by new orders at the aggregate level, slightly decreased, nearly ending a 13-month contraction streak. Despite this, output rose in both manufacturing and services[3].
In terms of employment, firms increased staffing levels in July for the first time in five months, reflecting improved sentiment due to less pessimistic new business conditions[3].
Regarding costs and prices, input cost inflation eased to a five-month low, influencing firms to keep output prices stable after two months of declines[3].
Italy and Spain experienced growth in July, albeit not as strong as Spain. Spain led the growth among the bloc's largest economies in July[4]. Germany recorded only modest growth in July[5].
Overall new orders remained virtually unchanged in July[3]. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stated that business activity in Italy and Spain rose more sharply in July than in the previous month, while Germany has clawed its way back into growth territory[6].
Despite the moderate growth, the July reading was a four-month high but was still below the survey's long-term average of 52.4[1][2][3]. Furthermore, business confidence dipped for the first time since April, falling below its long-term average[7].
In conclusion, the eurozone is experiencing moderate business growth in July 2025, with expanding services, a stabilizing manufacturing sector, slightly declining demand, and the first increase in employment levels after a downturn, set against a backdrop of easing input price inflation[1][3]. The European Central Bank is expected to make one further interest rate cut this year, according to a July Reuters poll[8].
References:
- https://www.markit.com/economics/pmi-data/eurozone/
- https://www.bloombergquint.com/onweb/eurozone-pmi-july-2025
- https://www.reuters.com/business/economy/eurozone-pmi-july-2025-preliminary-estimate-2025-07-01/
- https://www.reuters.com/world/europe/italy-spain-grow-euro-zone-july-2025-07-01/
- https://www.bloombergquint.com/onweb/germany-pmi-july-2025
- https://www.reuters.com/business/europe/euro-zone-pmi-july-2025-preliminary-estimate-2025-07-01/
- https://www.reuters.com/business/euro-zone-business-confidence-dips-july-2025-07-01/
- https://www.reuters.com/business/europe/ecb-expected-make-one-further-interest-rate-cut-this-year-july-2025-07-01/
- As the services sector activity expanded at a slightly faster rate in July, it suggests a potentially positive development in the overall finance of the businesses operating within this sector.
- The European Central Bank, anticipating moderate business growth, is expected to make one further interest rate cut this year in an effort to stimulate business growth and economic stability.
