Eurozone services return to growth, recovery sluggish

The key eurozone services sector returned to growth in August, with business activity across the board hitting a 26-month high, a closely-watched survey showed Wednesday. Analysts said growth across the 17-country eurozone would remain sluggish after an 18-month recession that cost millions of jobs and tested the cohesion of the single currency bloc to the limit. However, the data was not all positive -- growth in the powerhouse Germany economy was not enough to stop employment levels falling while second-ranked France slipped back faster than in July. The Composite Purchasing Managers' Index compiled by Markit Economics rose to 51.5 points in August from 50.5 in July but was down from the 51.7 points flagged in the first flash estimate. At 50.7 in August, up from 49.8 in July, Markit said its separate PMI for the services sector -- which accounts for the bulk of economic activity -- showed growth for the first timea in 19 months. Manufacturing activity had already crossed the 50-points boom-or-bust line in July. The PMI figures came as separate data on Wednesday confirmed that the eurozone grew 0.3 percent in the second quarter compared with the first, EU-wide growth coming in at an upwardly-revised 0.4 percent. "The eurozone recovery is looking increasingly broad-based, with more sectors and more countries emerging from recession," said Chris Williamson, Chief Economist at Markit. "Looking ahead, the hope for the eurozone is that currently rising confidence will encourage businesses to lift their employment and investment plans, and will also encourage consumers to spend more," IHS Global Insight analyst Howard Archer said.