The final July composite output index weighed in at 48.6, down 0.3 points versus its flash reading and 1.3 points short of its final print in June. It was also an 8-month low.

Weakness partly reflected a slowdown in services, where the 51.1 flash sector PMI was trimmed to 50.9, now 1.1 points below June's final mark and a 6-month trough. Total new orders fell again and by the most in nine months, with exports a major drag as overseas demand contracted at the steepest rate since the start of Covid. Backlogs also declined for a fourth month and similarly at an accelerated pace. Against this backdrop, employment growth slowed, and business confidence weakened. Inflationary pressures eased somewhat but the rates for both input costs and output prices were only fractionally weaker than in June and historically still strong.

In terms of national composite output indices, the best performing country was Spain (51.7), followed by Ireland (50.0). Italy (48.9), Germany (48.5) and France (46.6) were all well below the 50-expansion threshold.

The July update paints a fairly dismal picture of overall Eurozone business activity, albeit mainly due to the acute weakness of the manufacturing sector. Inflation trends at least appear to be moving in the right direction, but in services in particular, remain high enough to trouble the ECB. Today's update puts the Eurozone ECDI at 8 and the ECDI-P at minus 5. Both measures indicate that overall economic activity is broadly meeting market expectations.

No revisions are expected to the flash data leaving the composite output index at 48.9 and the services PMI at 51.1.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.