Eurozone News
LAST UPDATE: July 24, 2025
Euro zone business activity growth hits 11-month high in July, PMI shows
The HCOB composite PMI rose to 51.0 in July (from 50.6 in June), marking the fastest growth in 11 months, driven by services and improving manufacturing. Demand stabilized, and inflation pressures eased.
Insight
The rebound signals a broader euro‑area recovery with subdued inflation supportive of further ECB rate cuts. However, some growth may be temporary, driven by pre‑tariff ordering ahead of August 1.
German private sector growth remains tepid in July, PMI shows
Germany’s flash composite PMI slipped slightly to 50.3 in July, down from 50.4 in June. Manufacturing continued expanding modestly, and services stabilized.
Insight
While avoiding contraction, Germany’s low‑growth trajectory points to persistent headwinds in Europe’s engine, probably limiting broader euro‑zone momentum.
Germans reluctant to open wallets despite easing inflation
Despite inflation cooling to 1.6–2.6%, German consumers remain cautious, saving more and holding back on spending such as retail and leisure, due to lingering fears over cost-of-living pressures, economic stagnation, and potential U.S. tariffs.
Insight
This consumer hesitancy, rooted in both historical inflation trauma and current economic uncertainty, risks prolonging Germany’s sluggish growth, undermining the ECB’s monetary easing efforts and dampening broader euro-zone recovery.
French private sector activity contracts again in July, PMI shows
France’s private sector PMI fell below 50 for the 11th consecutive month in July, signaling ongoing contraction amid political uncertainty and weak demand.
Insight
The continued drag from France underscores uneven euro‑zone recovery—highlighting risks to regional growth unless political and business sentiment improves.
Spain’s unemployment rate falls to lowest since 2008
Spain’s unemployment dropped to 11.6% in June—the lowest since 2008—driven by tourism-driven seasonal hires and services sector expansion.
Insight
While the reduction offers a positive labor-market signal, the fall may be seasonal, masking structural employment challenges.
