Gloomy outlook for Euro zone business growth

Euro zone business growth was weaker than expected in July, hampered by a deepening contraction in manufacturing, and forward-looking indicators in surveys published on Wednesday suggest conditions will get worse next month.

The downturn appears widespread, with survey results missing expectations in the euro zone as well as in Germany and France, the bloc’s two biggest economies and the only ones to report preliminary data.

That will make disappointing reading for policymakers at the European Central Bank, who are expected to signal on Thursday a bias towards cutting its already-negative deposit rate this year to try to boost growth and inflation.

Doing little to dispel those expectations, IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI), considered a good guide to economic health, dropped to 51.5 this month from a final June reading of 52.2, missing the median expectation in a Reuters poll for 52.1 and closer to the 50 mark separating growth from contraction.

Via Reuters