Eurozone factories sent mixed signals in July: Germany's manufacturing sector grew at its fastest pace in years, France slipped into contraction, and Italy's expansion cooled as new orders stalled. The divergence points to an uneven manufacturing picture across the currency bloc's three largest economies.
Eurozone manufacturing delivered a split picture for July, with Germany accelerating even as France and Italy lost momentum. Germany's final manufacturing PMI held at 52.2, matching its preliminary estimate and up from a prior reading of 50.3.
However, France's final manufacturing PMI fell to 49.8, a slight downward revision from the 50.0 preliminary print and down from a prior reading of 51.2, pulling the sector below the 50 threshold that separates growth from contraction. Meanwhile, Italy's manufacturing PMI came in at 51.3, missing the 52.3 expected and down from a prior reading of 52.2.
Germany's export-led acceleration
Germany's factories posted output growth that accelerated to its highest level since February 2022, buoyed by export sales. Input cost inflation eased to its weakest pace since the outbreak of the Middle East war, primarily linked to the drop in oil prices through June and into early July.
Still, according to Phil Smith, Economics Associate Director at S&P Global Market Intelligence: "Germany's manufacturing sector made an impressive start to the third quarter". Year-ahead business expectations stayed subdued and below levels seen before the conflict began, while supply-chain delays worsened again in July amid bottlenecks in the global electronics industry.
France slips into contraction
New order inflows fell for a third straight month while production volumes also decreased, though the pace of decline stayed only modest overall. Input price inflation slowed to its lowest rate in four months, even as output charges rose again at a pace only narrowly weaker than in June. Yet most of July's survey data was collected before oil and energy prices climbed late in the month, S&P Global noted, adding that the increase could further undermine already weak business confidence.
Italy cools as new orders stall
Growth in new orders fell for the first time in three months, with firms no longer getting a lift from customer stockpiling. Italian manufacturers also cut jobs and purchasing at the same time for the first time in 2026, even as inflationary pressures continued to soften. Economist Eleanor Dennison of S&P Global Market Intelligence said the headline figure masked subdued demand and rising hesitancy among businesses and customers once the underlying subindices were considered.
Sources: Investinglive Breaking News Feed, Investinglive Breaking News Feed, Investinglive Breaking News Feed
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