Euro zone business activity dipped more than predicted in July due to falling demand in the major services industry and industrial output at the fastest pace since COVID-19.

The flash Composite Purchasing Managers’ Index (PMI) fell to 48.9, below the 50 line separating expansion from contraction and below all predictions.

Manufacturing remains the euro zone’s Achilles heel, with producers cutting output at an accelerated pace.

As the services sector slows, the euro zone economy is likely to fall further.

Despite reducing backlogs and cutting prices, manufacturers declined, leading to sharply decreased input prices for factories.