The index of activity in the industrial sector of the eurozone in July decreases at a record rate since May 2020

In July 2023, manufacturing activity in the euro area declined at the fastest rate since May 2020, reports Reuters with reference to the data of the index of business activity (PMI) in the manufacturing sector of the eurozone from Hamburg Commercial Bank (HCOB) and S&P Global agency.

In July, the index fell to 42.7 from 43.4 in June. An indicator below 50 indicates a reduction in activity in the studied sector of the economy. The decrease in the index is primarily due to the reduction in demand, despite the decrease in prices in the industrial sector, reports Reuters.

According to the agency, a significant weakening of activity in July was observed in the three largest economies of the eurozone – Germany, France and Italy.

HCOB chief economist Cyrus de la Rubia told Reuters that the recession in the eurozone’s industrial sector appears to be lingering and that a “bumpy road” awaits the economy of the monetary union in the second half of the year.

27 July European Central Bank (ECB) raised base rate at 25 bp. p., up to 4.25%. This is the highest level since the beginning of 2001. The rate on deposits was increased to 3.75%, the rate on the margin credit line – up to 4.5%.

According to Eurostat, the GDP of the euro area countries in the second quarter showed an increase of 0.3% compared to the first three months of the year. The highest growth compared to the previous quarter was shown by the GDP of Ireland (by 3.3%) and Lithuania (by 2.8%). A decrease in the indicator was recorded in Sweden (-1.5%), Latvia (-0.6%), Austria (-0.4%) and Italy (-0.3%). Inflation in the euro area, as reported by Eurostat, continued to decline – in July, the figure was 5.3% against 5.5% a month earlier.

Read more about the economic performance of the Eurozone – in the publication “Kommersant” “Eurozone went up”.

Erdni Kagaltynov