Eurozone Services PMI Expands, Middle East Non‑Oil Activity Shows Uneven Recovery

The Eurozone services Purchasing Managers' Index (PMI) rose from 49.4 in June to 51.7 in July, moving back into expansion territory for the first time since the war in the Middle East began. The improvement was driven by stronger domestic demand, modest job gains and a slight easing of inflationary pressures, while export orders continued to fall but at a slower pace. The composite PMI for the euro area climbed to 52, indicating overall growth for the first time since March. Germany posted growth for the first time since March, while Italy and Spain accelerated, with Spain recording its biggest rebound in more than a year and a half. France remained in contraction, though the decline moderated.

In the Middle East, the non‑oil PMI index recovered to 55.4 in July after a sharp drop to 48.5 in March, the region’s first contraction in nearly six years. Saudi Arabia led the recovery, posting the strongest production growth over the three‑month period, while the United Arab Emirates saw its PMI rise to 52.7 in July, rebounding from a five‑year low. Lebanon’s activity stabilized, but Kuwait and Qatar continued to face difficulties, with Qatar’s recession deepening. Overall, the data suggest a mixed but improving picture for non‑oil economic activity across the region.