Eurozone Private Sector Growth Moderates In June
June 23 2017 - 4:24AM
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Eurozone private sector growth moderated in June from a six-year
high due to a slowdown in services activity, yet the economy
enjoyed the best quarter for six years, the flash data from the
Purchasing Managers' survey by IHS Markit showed Friday.
The composite output index fell to 55.7 in June from a joint
six-year high of 56.8 in May. The score was forecast to drop
moderately to 56.6. A reading above 50 suggests growth in the
sector.
However, at 56.4, the average Purchasing Managers' Index reading
for the second quarter was above the reading of 55.6 seen in the
first three months of the year. The score was also the highest
since the first quarter of 2011.
Despite the June dip, the average expansion in the second
quarter has been the strongest for over six years and is
historically consistent with GDP growth accelerating from 0.6
percent in the first quarter to 0.7 percent, Chris Williamson, the
chief business economist at IHS Markit, said.
The small falls in the survey's forward-looking components
suggest that growth might slow slightly in the second half of the
year, Capital Economics economist Jessica Hinds said.
The euro area flash services PMI declined more-than-expected to
54.7 from 56.3 a month ago. The expected reading was 56.1.
By contrast, the manufacturing PMI rose unexpectedly to 57.3
from 57.0 a month ago. The reading was forecast to fall to
56.8.
Slower growth was recorded in both France and Germany, down to
five- and four-month lows, respectively, largely reflecting weaker
rates of service sector expansion, data showed.
Germany's composite output index fell to 56.1 in June from 57.4
in May. Nonetheless, growth remained strong overall and was among
the fastest registered over the past six years.
Manufacturing output and services business activity increased at
slightly softer rates than in May.
The flash factory PMI fell less-than-expected to 59.3 in June
from 59.5 in May. The score was forecast to fall markedly to 59.0.
This was the second-strongest performance since April 2011.
At the same time, the services PMI declined to a five-month low
of 53.7 from 55.4 in May. The expected reading was 55.4.
In Germany, the private sector employment growth eased to a
six-month low. The survey data also signaled the weakest price
pressures since November 2016.
Although France's composite PMI dropped to 55.3 in June from
May's six-year peak of 56.9, the rate of increase remained marked
overall. The latest expansion extended the period of private sector
growth to one year.
The survey highlighted that job creation was the most marked in
just under ten years.
The service sector activity rose for the twelfth time in as many
months in June. The services PMI slid to 55.3 from 57.2 in May.
On the other hand, the factory PMI climbed to 55 from 53.8 in
the previous month. Manufacturing output also continued to increase
markedly, but at a fractionally softer pace than in the previous
month.
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