The services sector across several major economies returned to or approached expansion in July, according to S&P Global PMI surveys, ending multi-month contraction streaks in the UK and eurozone while India and Japan continued to grow, albeit at a slower pace. The UK services PMI rose to 52.1 from 48.8 in June, snapping two months of contraction, while the eurozone index climbed to 51.7 from 49.4, its fastest rate since February. India’s reading fell to 53.3 from 57.4, the weakest in 53 months, and Japan’s slipped to 51.2 from 52.2, the softest in several months. Germany and France remained marginally below the 50.0 expansion threshold at 49.8 and 49.6 respectively, but both recorded their mildest declines in recent months. Russia’s index rose to 49.0 from 48.2, still in contraction territory.

The recovery was driven in most cases by a rebound in new orders. The UK saw its first increase in new business in five months, supported by technology-sector demand and a modest uptick in consumer spending. The eurozone reported a similar turnaround in new orders, led by Spain, Italy, and a return to growth in Germany, while France posted its first rise in domestic new orders since November. India’s new business inflows eased after several months of strong performance, though export orders rose solidly, particularly from clients in the UAE, the UK, and the US. Japan’s new demand fell to a two-year low, and external orders declined for a fourth consecutive month.

Input-cost inflation showed a mixed picture. The UK, eurozone, France, and India all reported easing cost pressures, with the UK recording its lowest input-price inflation since February and India the weakest in six months. However, Germany experienced renewed cost increases linked to the expiry of temporary fuel-tax cuts and ongoing wage pressures, while Russia reported a renewed acceleration in input-price inflation attributed to fuel shortages driving up supplier and logistics costs. Japan continued to face high cost pressures, with input-price inflation only slightly below June’s four-year high, driven by Middle East tensions, labour costs, and yen weakness. Firms in Japan raised selling prices at the fastest pace since April 2014.

Labour markets remained fragile in several economies. The UK recorded its 22nd consecutive month of job cuts, matching the longest sequence in 30 years of data. France saw an intensification of job losses, while India’s hiring remained broadly stagnant despite a modest rebound. Germany’s job cuts slowed to a seven-month low. Business confidence improved in the UK, eurozone, and Germany, but slipped to a seven-month low in India. Analysts in London and Frankfurt noted that geopolitical risks from the Middle East and energy-price volatility could threaten the recovery, while economists in Tokyo pointed to persistent inflation as a factor that may push the Bank of Japan toward a rate increase in coming months.