“The purchasing managers' indices for July show that the significant rise in energy prices and ongoing supply chain problems are leaving deep skid marks on the economy,” writes Christoph Weil, Senior Economist at Commerzbank.

Key Quotes:

“The massive rise in consumer prices has torn large holes in the pockets of private households and noticeably curbed their propensity to spend. The services sector is feeling the full force of this. Activity in this sector is increasing only slightly.”

“Demand for industrial products is also declining. As a result of weaker demand, pressure on supply chains appears to be easing. In addition, weaker demand is reducing the scope for companies to raise selling prices.”

“This will strengthen the position of the doves in the ECB Governing Council, who are more likely to seek a slower tightening of monetary policy, especially as there are signs that the inflation push may soon reach its peak.”