According to the report from IHS Markit, business activity across the eurozone rose for the first time since February, growing at the sharpest rate for just over two years as economies continued to reopen after lockdowns implemented to prevent the spread of the coronavirus disease 2019 (COVID19). Output expectations improved, while new order inflows also picked up and job losses eased, albeit with job cutting remaining widespread as many firms continued to scale back capacity.

The flash Eurozone Composite PMI rose further in July from the all time low of 13.6 seen back in April, climbing from 48.5 in June to 54.8. This was the first reading above the 50.0 nochange level since February and indicated the largest monthly gain in output since June 2018. Both manufacturing and services returned to growth (the latter recording the slightly stronger performance), with growth hitting 23- and 25-month highs respectively. While the rise in service sector output was the first since February, the increase in factory production was the first reported since January 2019. The improvement in part reflected a technical rebound from recent lockdowns, as businesses and their customers increasingly returned to work following the further relaxation of COVID-19 containment measures across the region during the month.

Demand was also reported to have revived alongside the lifting of lockdowns, with new order inflows likewise rising for the first time since February and increasing to an extent not seen since October 2018. However, the upturn in new orders was less marked than that recorded for output, thanks in part to a further loss of export sales, leading to an ongoing depletion of backlogs of work during the month.

Looking ahead, expectations of future output continued to improve from the low plumbed in March, rising to five-month highs in both manufacturing and services, the latter reporting relatively greater prospects. Hopes of improved performance over the coming year often reflected expectations of a further opening up of economies, though companies also often warned that any gains were from historically low bases, due to business volumes having been hit hard by the pandemic.