Growth in Services Hides Manufacturing Weakness in U.S. and Eurozone

The latest data for July 2025 from S&P Global show the US and Eurozone economies are growing, but not across the board. Both regions rely mostly on their service sectors, like finance, healthcare, and retail, for progress.

Factory activity is shrinking, raising concerns about long-term stability, jobs, and costs. In the US, the overall business activity measure—the composite PMI—jumped to 54.6, its best showing in seven months.

The services side surged to 55.2, showing solid demand, but factory activity fell to 49.5. Any score below 50 means production is shrinking. This split means strong consumer spending helps, but factories are struggling.

US business leaders worry about the future. Confidence is at its lowest in two and a half years. They blame new and expected tariffs and planned cuts in federal spending for the anxiety.

Rising wages and import tariffs push up costs, forcing companies to increase prices for customers. This could make inflation worse. In the Eurozone, the composite PMI rose to 51.0, its highest in almost a year.

The services sector grew to 51.2, while manufacturing edged up only to 49.8, still below the growth mark. Factories in the region continue to cut jobs and face lower orders, even as services show partial recovery.

So, while growth continues in both regions, it leans almost entirely on services. This leaves economies exposed since factories provide high-value jobs and export income.

Falling business optimism and steady inflation pressures add to the risk, possibly affecting hiring, wages, and household budgets in the coming months.

This story is based strictly on official figures from S&P Global and HCOB’s July 2025 Purchasing Managers’ Index releases, verified against primary sources and presented transparently. No information here is invented or exaggerated.

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