Key facts
- Euro zone factory output surged at its fastest pace in nearly four-and-a-half years in July.
- The headline S&P Global Eurozone Manufacturing PMI rose to 51.9 in July, up from 51.4 in June.
- Growth was largely driven by firms clearing order backlogs rather than rising demand.
- New orders rose only marginally in July, well below the pace of output growth.
- Export orders fell again in July.
- Factory employment fell again in July.
- Input cost inflation eased to a five-month low, and factory gate prices rose at their softest pace since March.
Euro zone factory output surged at its fastest pace in nearly four-and-a-half years in July, but growth was largely driven by firms clearing order backlogs rather than rising demand, indicating a fragile recovery. The headline S&P Global Eurozone Manufacturing PMI rose to 51.9 in July from 51.4 in June, its highest reading since April. However, new orders saw only marginal growth, well below the pace of output, suggesting factories are relying on prior months' business. Export orders also declined. Factory employment fell again in July, extending a run of job cuts.
Conflict in the Middle East has disrupted supply chains and sent energy costs soaring, contributing to difficulties for manufacturers. Inflation in the common currency bloc rose to 2.9% in July from 2.8% in June. Input cost inflation eased to a five-month low, and factory gate prices rose at their softest pace since March, though supply chain pressures remained elevated.
Hungary's manufacturing PMI decreased to 51.4 in July from 51.6 in June, indicating slower expansion. Spain's manufacturing sector returned to marginal growth in July with its PMI rising to 50.2, despite falling output and new orders. Turkey's manufacturing sector contracted in July with its PMI at 47.7.