Weak industrial data from Germany and France have pushed the European manufacturing index further into recession. This economic downturn is mirrored in the labor market, with the Eurozone unemployment rate inching up from 6.4% to 6.5% in July.

The HCOB Eurozone Manufacturing PMI remained at 45.8 in July 2024, matching the year-to-date low from the previous month, though slightly revised from an initial 45.6. The stagnant PMI highlights the continuing struggles in the sector, with significant economies experiencing accelerated declines in activity.

For the 14th consecutive month, new orders have contracted, forcing factories to rely on backlogs to sustain output. This drop in demand has led to the steepest reduction in net employment this year as firms cut back on hiring and purchasing.

Input cost inflation has surged to a one-year high, though it remains below the long-term average. Notably, factories have resisted passing these increased costs onto clients.