By Paul Hannon 

The eurozone economy slowed in July, according to a survey of businesses, an indication that it may not perform as strongly in the second half of the year as it has in the first.

The currency area has been one of the positive surprises this year, as it outpaced the U.S. in the first quarter and appears to have accelerated further in the three months to June.

Reflecting that surprising strength, the International Monetary Fund on Sunday raised its growth forecast for 2017 to 1.9% from 1.7%, even as it cut its forecast for the U.S. to 2.1% from 2.3%.

The unexpected acceleration has brought the European Central Bank's stimulus measures into focus, with policy makers set to consider whether to extend a bond buying program, and if so at what scale, in September or October. Speaking Thursday, ECB President Mario Draghi said the currency area is "finally experiencing a robust recovery."

However, a survey of purchasing managers at 5,000 manufacturers and service providers across the currency area suggests the recovery may already have peaked.

Data firm IHS Markit on Monday said its composite Purchasing Managers Index for the eurozone fell to 55.8 in July from 56.3 in June. That was below the 56.2 reading expected by economists who were surveyed by The Wall Street Journal last week, and a six-month low. A reading above 50.0 signals an increase in activity, while a reading below signals a decline.

The decline in the PMI is unlikely to signal the start of a sharp slowdown, since the surveys found that new orders remain strong and businesses are continuing to hire. But it does suggest growth may moderate to rates more in keeping with the typical pace of the recovery since it began in mid 2013.

The survey also indicated that inflationary pressures remain weak, as businesses raised their prices at the slowest pace since January. Speaking Thursday, Mr. Draghi said the central bank would be motivated by the desire to reach its inflation target, rather than settle for stronger growth and lower unemployment without meeting that goal.

"The slowing pace of economic growth signaled by the surveys and the accompanying easing of price pressures adds to the belief that ECB policymakers will be in no rush to taper policy, and will leave adoptions open until the central bank sees a clearer picture of the sustainability of the upturn," said Chris Williamson, chief economist at IHS Markit.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

July 24, 2017 05:06 ET (09:06 GMT)

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