The euro area private sector activity posted its weakest growth in the current five-month sequence of expansion amid falling demand and weaker sentiment, final data from S&P Global showed on Monday.
The final composite output index slid to 50.2 in July from 50.9 in June. The flash reading was 50.1.
The score moved close to the 50.0 threshold, suggesting that growth was only fractional and also the weakest since activity levels began rising in March.
Data split by sector showed that services remained the sole source of growth. A sharp decline in factory output and a softer upturn in services led to an overall slowdown in the private sector.
The services Purchasing Managers Index posted 51.9 in July, down from 52.8 in June. The index marked the third successive decrease and matched the flash estimate.
New business dropped for the second straight month in July due to weaker sales in the manufacturing sector. New orders from foreign customers dropped at the sharpest rate in five months.
Companies cleared backlogs of work to support activity amid falling intakes of new business. The pace of depletion of backlog was the quickest since February.
Companies expect activity to be higher in 12 months although the level of optimism was the weakest since January.
Employment broadly stagnated in July with sales, backlogs and confidence all deteriorating.
Input cost inflation accelerated among manufacturers and service providers. Input cost inflation was the joint-quickest in 14 months. However, output charges grew at the slowest rate since last October.
Country-level survey data revealed a renewed drag on the eurozone economy from Germany, which saw business activity levels decline for the first time since March. The French private sector continued to deteriorate, while expansions in Spain and Italy were sufficient to just about offset contractions in Germany and France.
Germanys HCOB composite PMI fell below the neutral 50.0 threshold to 49.1 in July from 50.4 in June. The score was above the initial estimate of 48.7.
The services PMI logged a four-month low score of 52.5 in July, down from 53.1 in June but above the flash 52.0.
Frances private sector shrank at a slower pace in July. The composite output index rose to 49.1 in July from 48.8 in June. The initial reading was 49.5.
The decline was entirely driven by manufacturing as output in the service sector was little-changed since June. The services PMI registered 50.1 in July compared to the flash score of 50.7.
Italys private sector posted the slowest growth so far this year due to the softer expansion of services activity. The HCOB composite output index dropped to 50.3 in July from 51.3 in June.
The services PMI registered 51.7 in July compared to 53.7 in June. The score was forecast to drop moderately to 52.9.
Spains private sector growth softened to the lowest since January but the pace of growth was strong. The HCOB composite output index slid to 53.4 in July from 55.8 in the previous month. The services PMI posted 53.9 compared to 56.8 in June.