Eurozone Preliminary Manufacturing PMI slumps to 49.6 in July vs. 51.0 expected

• Eurozone Manufacturing PMI arrives at 49.6 in July vs. 51.0 expected.
• Bloc’s Services PMI falls to 50.6 in July vs. 52.0 expected.
• EUR/USD keeps the red near 1.0140 on the downbeat Eurozone PMIs.

The Eurozone manufacturing sector activity unexpectedly contracted in July, the latest manufacturing activity survey from S&P Global research showed on Friday.

The Eurozone Manufacturing purchasing managers index (PMI) arrived at 49.6 in July vs. 51.0 expectations and 52.1 last. The index hit a 25-month low.

The bloc’s Services PMI dropped sharply to 50.6 in July vs. 52.0 expected and 53.0 prior. The indicator reached 15-month lows.

The S&P Global Eurozone PMI Composite slumped to 49.4 in July vs. 51.0 estimated and 52.0 previous. The gauge clocked its lowest level in 17 months.

Comments from Chris Williamson, Chief Business Economist at S&P Global

“The eurozone economy looks set to contract in the third quarter as business activity slipped into decline in July and forward-looking indicators hint at worse to come in the months ahead.”

“Excluding pandemic lockdown months, July’s contraction is the first signalled by the PMI since June 2013, indicative of the economy contracting at a 0.1% quarterly rate. Although only modest at present, a steep loss of new orders, falling backlogs of work and gloomier business expectations all point to the rate of decline gathering further momentum as the summer progresses.”

FX implications

EUR/USD remains heavily offered near 1.0140 on dismal euro area PMIs. The spot is down 0.90% on the day. Recession bells in the euro area now sound load and clear.