The eurozone is still growing, racking up economic expansion of 0.3% in the second quarter from the first, helped by a stronger-than-expected performance from Germany. But Italy posted a worrying development. Its shallow expansion ground to a halt.

Italy’s economy had been expected to grow 0.2% in the second quarter, but the Italian statistics office reported zero growth, with domestic demand weakening and only just offset by external demand. The end result is that Italy is falling further behind the pace in Europe—a long-running...