Eurozone Economic Update - July 2026
Overview
Recent data indicates a surprising recovery in the Eurozone, with the Composite PMI rising to 51.9, surpassing forecasts and marking the highest level in five months. This improvement comes amidst rising oil and gas prices, which could temper the recovery's sustainability.
Key Economic Indicators
Eurozone
- Composite PMI: 51.9 (Forecast: 50.2, Previous: 50.0)
- Manufacturing PMI: 52.0 (Forecast: 51.5, Previous: 51.4)
- Services PMI: 51.6 (Forecast: 49.8, Previous: 49.4)
Cost pressures have decreased, easing the European Central Bank's (ECB) concerns regarding further interest rate hikes. However, the rise in oil prices to $100 and gas prices above €60/MWh may pose challenges ahead.
Germany
- Composite PMI: 51.2 (Forecast: 49.7, Previous: 49.5)
- Manufacturing PMI: 52.2 (Forecast: 50.5, Previous: 50.3)
- Services PMI: 49.6 (Forecast: 49.0, Previous: 48.6)
Germany has returned to growth, breaking a three-month streak of declines, primarily driven by manufacturing. However, the services sector remains below the growth threshold.
France
- Composite PMI: 49.6 (Forecast: 47.8, Previous: 47.2)
- Services PMI: 49.8 (Forecast: 47.5, Previous: 46.8)
- Manufacturing PMI: 50.0 (Previous: 50.0)
Despite a weak manufacturing sector, France's services sector showed robust growth, although rising fuel prices and political uncertainty ahead of the presidential election create a fragile economic landscape.
Global Economic Outlook
In Asia, economic data presents a mixed picture. Japan's manufacturing shows solid growth, while India's private sector growth has slowed. Concerns regarding raw material costs and logistics remain prevalent.
Attention now shifts to the US, where preliminary PMI data for July is expected. The US economy has shown resilience, but high interest rates and labor costs may impact future growth.
EUR/USD Technical Outlook
The EUR/USD pair is breaking out of an upward trend channel, with key resistance at 1.14. Rising gas prices could lead to a decline below 1.13, while a retreat in energy prices may allow the pair to rebound towards 1.15.