Euro Zone Business Growth Stalls In July

• Growth in euro zone business activity has stalled this month as a tepid expansion in the bloc's dominant services industry failed to offset a deeper downturn among manufacturers, a survey showed on Wednesday.
• Hamburg Commercial Bank’s (HCOB) preliminary composite Purchasing Managers' Index, compiled by S&P Global, dropped to 50.1 this month from June's 50.9, barely above the 50-mark separating growth from contraction and defying expectations in a Reuters poll for an uptick to 51.1.
• "The euro zone's flash July PMIs corroborate the message sent by other leading indicators that the recovery is faltering. If leading indicators continue to underwhelm, this may result in a downgrade to our GDP growth forecasts," said Rory Fennessy at Oxford Economics.
• The bloc's economy will average 0.7% growth this year and 1.4% next, according to a Reuters poll earlier this month. The region's No. 1 economy, Germany, will expand a meagre 0.2% this year and 1.2% in 2025, the poll showed.
• Those German numbers could also be revised down as business activity there unexpectedly contracted this month, dragged down by a steep and dramatic fall in manufacturing output, its PMI indicated.
• Consequently, expectations about the coming year in the euro zone waned again, suggesting business managers do not expect an imminent turnaround. The composite future output index registered a six-month low of 60.0 compared to June's 60.8.
• Of note, the European Central Bank (ECB) is expected to cut its deposit rate twice this year, in September and December, according to a strong majority of economists in the Reuters poll.

 (Source: Reuters)