JP Morgan AM: Eurozone PMIs point to potential weakness ahead

JP Morgan AM: Eurozone PMIs point to potential weakness ahead

July 31, 2023

Eurozone
Stock exchange euromunten.jpg

The flash eurozone composite Purchasing Managers’ Index (PMI) moved further into contractionary territory in July to 48.9, its lowest level in eight months. While manufacturing continues to be the main source of weakness, the services sector also appears to be losing steam, growing at its slowest pace since January. 

What’s more, deterioration in forward-looking components, such as the new business index, suggest that the services sector could soon begin to weigh on overall economic activity too. This slowing in the growth outlook was not enough to stop the European Central Bank (ECB) from hiking interest rates by 25 basis points last week. Yet looking forward, a combination of weaker growth and moderating price pressures is likely to make the ECB’s decision at its September meeting much more finely balanced.

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