Euro Area Composite PMI Hits Eight-Month High of 52.0 as Services Return to Growth
Private-sector activity across the euro area expanded at its fastest rate in eight months in July, with the services sector returning to growth for the first time since March, according to S&P Global survey data published on 5 August 2026.
The euro area composite output index rose to 52.0 from 50.0 in June, an eight-month high, while the services business activity index rose to 51.7 from 49.4, a five-month high. The services reading ended a three-month spell of decline.
| S&P Global PMI, July 2026 | Services | June | Composite | June |
|---|---|---|---|---|
| Euro area | 51.7 | 49.4 | 52.0 | 50.0 |
| Germany | 49.8 | 48.6 | 51.3 | 49.5 |
| France | 49.6 | 46.8 | 49.4 | 47.2 |
| Italy | 52.5 | 50.2 | 52.5 | 50.8 |
| Spain | 58.3 | 54.2 | 56.5 | 53.3 |
Both output and new orders across the currency bloc were the strongest since last November. New business rose for the first time since February and at the fastest rate since November. Employment stabilised, following a six-month run of net job losses. On the cost side, input cost inflation eased to a five-month low and output charges rose by the smallest margin since March.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that “a rise in the headline output index means the survey is signalling quarterly GDP growth of 0.3 percent, importantly reflecting an increasingly broad-based upturn.”
The national detail is less uniform than the aggregate. In Germany the composite index rose to 51.3 from 49.5, and the release stated that at that level the index “returned to growth territory for the first time since March.” The German services index, however, was 49.8 and remains below the 50.0 no-change mark, so the return to growth is a composite result carried by manufacturing rather than a services recovery. New business in Germany rose for the first time in five months, though only marginally. Phil Smith, Economics Associate Director at S&P Global Market Intelligence, said that “business conditions have steadied across the service sector.”
France remained in contraction on both measures, with services at 49.6 from 46.8 and the composite at 49.4 from 47.2. The French release noted “the first rise in new business volumes since late last year,” while adding that “the uptick in new orders was only slight, however.” Export new business fell more sharply than total new business, which on our reading means the improvement in French demand is domestically driven.
The southern economies led. Italy’s services index rose to 52.5 from 50.2, its strongest in six months, with the composite also at 52.5 from 50.8 and job creation the quickest in more than a year. Eleanor Dennison, Economist at S&P Global Market Intelligence, said that “the Italian service sector not only maintained growth, but the rate of expansion in activity accelerated.” Spain was stronger still, with services at 58.3 from 54.2 and the composite at 56.5 from 53.3, the strongest reading since March 2023, alongside the weakest rise in output prices in more than five years. Paul Smith, Economics Associate Director at S&P Global Market Intelligence, said that “service sector growth took off during July as market demand strengthened.”
Why it matters: The euro area has moved from stagnation to modest growth, and the composition of the move is more encouraging than the headline. Employment stabilising after six months of losses, new orders rising for the first time since February, and input cost inflation at a five-month low together describe an expansion that is not being bought with fresh price pressure. On our reading the weak point is the core: Germany’s services sector is still contracting and France remains below 50 on both measures, so the aggregate improvement was led by Spain and Italy, while Germany’s services sector and the French private sector remained in contraction. A 0.3 percent quarterly growth signal is a recovery from a low base rather than an acceleration.
Looking ahead: Attention turns to whether the improvement in new orders is sustained into August and whether German services can cross above 50. Softer input cost inflation across the bloc gives the European Central Bank more room to weigh growth against prices at its next assessment.
Sources: S&P Global, Eurozone Services and Composite PMI release for July 2026, 5 August 2026; S&P Global Germany, France, Italy and Spain Services and Composite PMI releases, 5 August 2026.
