The optimism seen in the eurozone since the start of the year lost momentum in July, as survey results showed the eurozone economy is waning, with activity in both the manufacturing and the services sectors slowing down.
The HCOB Composite Purchasing Managers’ Index, or PMI, fell to 50.1 in July, just above the 50 threshold that separates expansion from contraction. Economists had expected the PMI to expand at a faster rate to 51.1 from the 50.9 reported in June. The manufacturing component of the index contracted to 45.6 in July from June’s 45.8, while the services PMI expanded at a slower pace of 51.9, down from 52.8 the previous month.
The latest PMIs could be welcomed by policymakers at the European Central Bank who left interest rates on hold in the July meeting, having lowered them in June, but left all options open for September’s decision.
Meanwhile, sentiment among German business executives unexpectedly fell in July amid concerns about the performance of Europe’s largest economy, a survey of around 9,000 business leaders showed on Thursday.
The Institute for Economic Research (Ifo) said on Thursday that its Business Climate Index deteriorated in July, coming in at 87.0 down from 88.6 in June. July’s reading was lower than economists had forecasted.
Meanwhile, the Current Assessment Index fell from 88.3 in June to 87.1 in July. The Expectations Index fell by 0.7 points to 88.3 in July. This is the third consecutive decline in Germany’s most prominent leading indicator.
“The German economy is stuck in the crisis,” Ifo president Clemens Fuest said.
Finally in the US, sales of existing homes fell more than expected in June, while the median house price scaled to another record high.
Existing home sales fell for a fourth consecutive month as data from the National Association of Realtors (NAR) showed on Tuesday that previously-owned home sales fell by 5.4 per cent from May, resulting in a seasonally adjusted annual rate of 3.89 million units and lower than the expected 3.99 million.
In the meantime, the median existing-home price bounced 4.1 per cent from June 2023 to $426,900. Existing homes have been experiencing a consistent downward trajectory over the past two years.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” Lawrence Yun, the NAR’s chief economist, said.
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