Eurozone Private Sector Growth Slowest In 1-1/2 Years
22 Juli 2016 - 10:42AM
RTTF2
Eurozone private sector expanded at the weakest pace in 18
months in July, but remained resilient in the face of the surprise
"Brexit" vote and the terror attack in France.
The relief from serious economic concerns could be short-lived,
as feared by the European Central Bank policymakers, who signaled
on Thursday that they stand ready to pump more stimulus in the
coming months.
The flash composite output index fell to 52.9 in July, an
18-month low, from 53.1 in June, preliminary results of a survey by
Markit showed Friday. Economists had forecast a weaker score of
52.5.
The reading signaled a marginal easing in the output growth
across both manufacturing and services.
The services Purchasing Managers' Index, or PMI, dropped
marginally to 52.7 from 52.8 in June. The score was expected to
drop to 52.3.
At the same time, the manufacturing PMI slid more-than-expected
to 51.9 from 52.8 in the previous month. Economists had forecast a
reading of 52 for July.
"The eurozone economy showed surprising resilience in the face
of the UK's vote to leave the EU and another terrorist attack in
France," Markit Chief Economist Chris Williamson said.
In the June 23rd referendum, 52 percent Britons opted to leave
the European Union.
The overall rate of economic growth is largely unchanged,
suggesting GDP is growing at a sluggish but reasonably steady
annual rate of around 1.5 percent, said Williamson.
Further, private sector employment continued its rising trend
for a fourth month and grew at the fastest rate for almost
five-and-a-half years as companies boosted capacity in line with
the overall upturn in the economy, the survey said.
That said, it remains uncertain whether the boom in job creation
will continue as the service sector confidence weakened due to the
uncertainty created by "Brexit".
Meanwhile, export growth slowed marginally, partly due to weaker
sales to the U.K. amid the referendum and a weakening pound.
Input cost inflation hit a one-year high driven by a weak
currency and rising oil prices, while selling prices continued to
decline marginally.
Preliminary data for the German private sector showed that
output growth was the fastest thus far this year during July,
leading to one of the strongest job creation by companies in the
last five years.
While the German manufacturing PMI eased slightly to 53.7 from
54.5, the services indicator climbed to 54.6 from 53.7. The
Composite PMI rose to a seven-month high of 55.3 from 54.4.
In France, private sector activity stabilized after declining in
the previous month as service sector expanded. The Composite PMI
rose to 50 from 49.6. The manufacturing measure climbed to 48.6
from 48.3 and the services indicator increased to 50.3 from
49.9.
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