Euro area private sector activity recorded its weakest growth within a five-month expansion period, driven by declining demand and reduced sentiment, according to final data from S&P Global released on Monday.
The composite output index dipped to 50.2 in July from 50.9 in June, slightly above the preliminary estimate of 50.1.
This score hovers near the 50.0 threshold, indicating that growth was minimal and the slowest since activity began increasing in March.
Sector-wise data showed that services were the sole contributors to growth. A substantial drop in factory output coupled with a softer rise in services contributed to an overall slowdown in the private sector.
The services Purchasing Managers' Index (PMI) declined to 51.9 in July from 52.8 in June, marking the third consecutive decrease and aligning with the flash estimate.
New business fell for the second month in a row in July, largely due to weaker sales in manufacturing. New orders from foreign customers experienced the steepest decline in five months.
To sustain activity, companies cleared backlogs amid falling new business intakes. The rate of backlog depletion was the fastest since February.
Although companies anticipate higher activity levels over the next 12 months, the level of optimism was the lowest since January.
Employment remained mostly stagnant in July, as sales, backlogs, and confidence all weakened.
Input cost inflation accelerated amongst manufacturers and service providers, reaching the joint-fastest pace in 14 months. However, output charges increased at the slowest rate since last October.
Country-specific survey data indicated that Germany presented a renewed drag on the eurozone economy, with business activity levels declining for the first time since March. The French private sector continued to deteriorate, while modest expansions in Spain and Italy balanced the contractions in Germany and France.
Germany's HCOB composite PMI fell below the neutral 50.0 level to 49.1 in July from 50.4 in June, yet above the preliminary estimate of 48.7.
The services PMI recorded a four-month low of 52.5 in July, down from 53.1 in June but above the flash estimate of 52.0.
France's private sector contracted at a slower rate in July. The composite output index rose to 49.1 in July from 48.8 in June, although initial readings suggested 49.5.
The decline was entirely driven by manufacturing, as output in the service sector remained relatively unchanged since June. The services PMI stood at 50.1 in July, slightly below the flash estimate of 50.7.
Italy's private sector experienced its slowest growth of the year due to a softer rise in services activity. The HCOB composite output index decreased to 50.3 in July from 51.3 in June.
The services PMI registered 51.7 in July, down from 53.7 in June, against expectations of a moderate decline to 52.9.
Spain's private sector growth eased to its lowest since January, although the pace remained robust. The HCOB composite output index fell to 53.4 in July from 55.8 in June. The services PMI saw a decline to 53.9 from 56.8 in June.
