Eurozone economic indicators to be published in the coming week will show an upturn in manufacturing as the sector takes heart from the lower euro, economists said. The eurozone purchasing managers' index for the manufacturing sector in July is forecast to rise above 50, the dividing line between expansion and contraction.
"We expect the euroarea index to rise above the 50 level this month, as the weaker euro-dollar exchange rate buoys manufacturers' optimism further over the export outlook," Royal Bank of Scotland economists said. HSBC economists agreed: "Given the improvements in German, French and Italian business confidence, we expect a further rise in the manufacturing PMI in July."
Equally, the French and German PMI manufacturing reports are forecast to rise above 50, while Italy is expected to remain just below.
"We look for modest improvements in the manufacturing surveys in lie with the pick-up in the national business survey data released in recent days," UBS economist Ed Teather said.
By contrast, only marginal gains - if any - are forecast for the service sector. "We expect the service sector PMI to be broadly unchanged in July after a modest decline in June from 53.5 to 53.1," HSBC economists said.
Royal Bank of Scotland economists were slightly more optimistic.
They noted the decline of the eurozone services PMI in June as well as the deterioration of the French and German surveys. "Preliminary evidence points to a reversal of these themes in July with sentiment buoyed by a more stable political situation in Germany and France, while in Italy sentiment is expected to decline a touch," they said.
Amongst other key data, German manufacturing orders and industrial output are expected to show improvements for June.