Eurozone manufacturing output accelerated in July while new orders and exports stayed weak. The survey’s output index moved up to 52.9 from 51.7, marking the highest point since March 2022. Production growth outpaced the overall manufacturing conditions, but companies relied heavily on orders received in previous months. New orders only saw a marginal increase and lagged behind production levels. Export orders declined once again. The downturn in France, Spain, Italy, and Austria outweighed gains elsewhere in the currency zone. Consequently, July’s production growth was mainly supported by existing order backlogs. Factories reduced unfinished work at the fastest rate since January by completing existing orders. This decline in order backlogs helped maintain production levels, even as incoming work stayed subdued. Additionally, manufacturers cut employment again in July, extending a period of job reductions across the sector. Companies continued managing staffing carefully, given the limited growth in orders. Business confidence improved to its highest since February, although it remained below the long-term average among eurozone goods producers. Demand growth remains behind manufacturing output Weak exports continued to act as a key obstacle to the manufacturing recovery. Several large eurozone economies reported fewer orders from international clients. Gains in other markets could not fully compensate for these declines. Domestic and export demand combined resulted in only a slight increase in new business. This contrasted with the stronger rise in manufacturing output and the quicker reduction of outstanding orders. Factories entered the third quarter with higher production activity than new orders coming into
