Euro area PMIs show private sector nearly stagnated in July

Activity in the euro area's private sector nearly stalled by surprise in July, the results of two closely followed surveys showed, with growth in France and Germany underperforming.

S&P Global's manufacturing sector purchasing managers index dropped from a reading of 46.1 for June to 45.3 in July (consensus: 46.1).

A separate PMI for services meanwhile fell from 52.8 to 51.9 (consensus: 53.0).

The PMI for the combined output from the two sectors meanwhile slipped from 50.9 to 50.1.

According to the survey compiler, new orders registered a second consecutive month of decline while business confidence plumbed a six month low, prompting companies to stop the hiring that had begun at the start of the year.

Input cost inflation meanwhile accelerated.

"Is this the summer lull? It feels a bit like it as the Eurozone economy barely moved in July, according to the HCOB Flash Eurozone PMI," said Dr.Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"[...] According to our GDP Nowcast, growth in the third quarter is still on the cards, however.

"[...] Our conclusion is that while a September rate cut will most probably be exercised, it will be much trickier to follow this path in the months thereafter, unless the downturn morphs into a deep recession."