Eurozone economy hits 'speed bump' in July: survey

Eurozone private sector business activity slowed in July for the second month running but was still running near six-year highs, a closely watched survey showed Monday.

Analysts said that while the slip in the headline readings of the survey by data monitoring company IHS Markit was disappointing, the economy remained on its best run since the eurozone debt crisis.

IHS Markit said its July Composite Purchasing Managers Index (PMI) came in at 55.8 points, the lowest reading in six months and down from 56.3 in June.

The PMI measures companies' willingness to invest in their business and so gives a good idea of how well the underlying economy is performing. 

Any reading above the boom-bust 50 points line indicates the economy is expanding.

By sector, the all important services index was unchanged at 55.4 points in July, while manufacturing fell to 56.8 points from 57.4 points in June.

IHS Markit chief business economist Chris Williamson stressed that the state of economy in the 19-nation eurozone remained "impressive".

"It’s too early to know for sure whether the economy has merely hit a speed bump or whether the upturn is already starting to fade," Williamson said.

"The evidence so far points to the former, with the economy hitting bottlenecks due to the speed of the recent upturn," he said.

On that basis, IHS Markit expected the economy to grow 0.6 percent in the three months to June, in line with the 0.6 percent reached in the first quarter.

Despite the slip, "the rate of job creation continued to run at one of the highest seen over the past decade," it noted. 

"Sentiment about prospects for the year ahead remained buoyant by historical standards, albeit slipping to the lowest since January," Markit added

Source: AFP