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Eurozone manufacturing begin Q3 on positive note

Xinhua, August 3, 2016 Adjust font size:

The rate of eurozone economic expansion ticked up at the start of the third quarter 2016, driven by a strong German economic performance, a survey showed Wednesday.

The composite manufacturing purchasing managers' index (PMI), a key measure of manufacturing activity in eurozone countries, was 53.2 in July, above the earlier flash estimate of 52.9, according to Markit, a global provider of financial information services.

The composite reading was the strongest for six months and the index has been in expansion territory for 37 successive months.

Meanwhile, the eurozone final PMI services-sector index strengthened to 52.9 from the flash reading of 52.7, which was marginally higher than expected.

A reading above 50 indicates expansion, while a reading below 50 represents contraction.

Although the latest data signaled a solid and steady pace of expansion, national data suggested that the upturn was uneven by nation.

The German PMI rose to 55.3 in July, from 54.4 in June due mainly due to strength in services where the PMI rose to 54.4, from 53.7 in June.

France continued to stagnate, acting as a significant drag on the region. In France, the composite PMI rose to 50.1, from 49.6 in June, trivially above the initial estimate 50.0.

Growth has also slowed in Spain and Italy, in both cases indicating that political uncertainty is hurting businesses. While the pace of expansion in Spain has merely slowed to around 0.6 percent in July, Italy is growing at a sluggish 0.2 percent pace, said Chris Williamson, chief economist at Markit.

Less positively, optimism regarding future performance fell to a 19-month low in the bloc, with business confidence easing across Germany, France, Italy and Spain.

Williamson said the up tick in the index is encouraging as it suggests the region saw little overall contagion from the Brexit vote.

However, the survey is still indicating only a modest 0.3 percent quarterly rate of economic growth at the start of the third quarter.

"Such a meager pace of expansion will inevitably fuel speculation about what the European Central Bank could and should do to boost growth, and when," Williamson said. Enditem