At 50.2 the PMI composite index for July is just barely above the 50.0 threshold and is the weakest this has been since March. This is lower than in June (50.9). This indicates very slight growth and is due to lower demand leading to less new workload compared to June. To compensate for the lack of new orders, backlog orders were cleared at an outstanding rate, the fastest since February. Businesses were their least optimistic since January, with sales, backlogs, and confidence all falling in July. Eurozone private sector employment also broadly stagnated.

The service index for July is 51.9, also lower than in June (52.8). This is due to weakness in orders and
sales with confidence in the outlook waning slightly. Output charges increased the least since May 2021, even as the rate of input cost inflation rises.

At the national level, the best-performing countries are Spain (53.4) and Italy (50.3), both of which see expansion of business activities. The weaker performing countries are Germany (49.1) and France (49.1), both of which fall short of 50 and see a contraction of business activity.

The Eurozone's RPI is at plus 29 and the RPI-P at plus 18. Broadly speaking, overall economic activity is outperforming market forecasts.

No revisions are expected leaving the headline composite output index at 50.1, down from June's final 50.9.

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.