Eurozone Services PMI Tops Forecast in July, Inflation Pressures Ease

Price pressures eased. Input cost inflation fell to its lowest since February. Output charge inflation dropped to its smallest since March. The overall price increase for euro-area goods and services was the smallest in five months. Both measures remain above the survey's long-run average, the report noted.

Hamburg Commercial Bank chief economist Cyrillus de la Rubia said the data pointed to "encouraging resilience" in the eurozone economy. The survey implied quarterly GDP growth of roughly 0.3%, he said, with the upturn becoming "increasingly broad-based." July saw the first significant increase in service sector activity since the outbreak of the war in the Middle East, he added.

De la Rubia cautioned that the positive figures came on the tailwind of June's lower oil prices and easing Middle East tensions. "With the conflict having since flared up again, we are seeing renewed downside risks to growth and upside risks to already-elevated inflation," he said. The combination puts policymakers in a more hawkish stance, he said. The marked drop in the PMI price gauges potentially provides a window for further rate hikes to be delayed until the outlook for inflation becomes clearer, de la Rubia said.