Eurozone Private Sector Contracts Most in 17 Months

The S&P Global Eurozone Composite PMI was revised higher to 52 in July 2026 from a preliminary estimate of 51.9 and 50 in June, moving back into expansion territory for the first time since March and signalling the strongest increase in business activity in eight months. The improvement was broad-based, with renewed growth in the services sector accompanied by a sustained and faster expansion in manufacturing output. Demand also strengthened, as new business increased for the first time since earlier this year and at the fastest pace since November, pointing to a solid start to the third quarter. Meanwhile, inflationary pressures continued to ease, with both input cost and output price inflation slowing further in July. Business confidence improved to its highest level in five months, reflecting growing optimism about the economic outlook.

The S&P Global Eurozone Composite PMI rose to 51.9 in July 2026 from 50.0 in June, well above market expectations of 50.3, a preliminary estimate showed. The reading signaled the first expansion in business activity in four months, supported by a renewed expansion in services and the fastest increase in manufacturing output since March 2022. Germany grew for the first time in four months, while France's downturn eased to a marginal contraction. Elsewhere, the rest of the eurozone recorded its strongest expansion in eight months. New orders rose at the fastest pace since April 2023, while export orders posted their smallest decline since March 2022. Employment increased for the first time this year, supply-chain pressures eased, allowing manufacturers to rebuild input inventories for the first time in three-and-a-half years, and both input cost and output price inflation moderated. Business confidence also improved to a five-month high, although it remained below pre-conflict levels.

The S&P Global Eurozone Composite PMI was revised up to 50.0 in June 2026, from a preliminary 49.5 and above May’s 48.5, marking a stabilization in private sector output after two months of decline. Manufacturing production growth offset a slower but continued drop in services activity. Italy, Spain, and Ireland drove the recovery with sharper expansions in business activity, while Germany and France, though still in contraction, saw their rates of decline ease. New business volumes fell for a fourth month, but the contraction was marginal and the joint-slowest since March. Employment remained virtually unchanged after the steepest drop in five and a half years, and backlogs depleted at a slightly slower pace than in April and May, though still among the fastest of the past year. Input and output costs rose sharply but at a slower rate than recent peaks, while business confidence reached its highest level since the outbreak of war in the Middle East.