World Economy

Eurozone Services Sector Expanding

Eurozone Services Sector ExpandingEurozone Services Sector Expanding

The services sector in the 19-state eurozone remained in expansion territory in July, with the respective purchasing managers index reading improving slightly when compared to June, a final survey by IHS/Markit Economics showed on Wednesday.

The services PMI in the eurozone hit 52.9 points in the month of July, following 52.8 booked a month before. That compared to estimates of 52.7 points, WBP reported.

The composite PMI revealed 53.2 points in July, after hitting 53.1 in June, while analysts had forecast 52.9 points.

“A welcome uptick in the final PMI numbers presents a slightly better picture than the slowing signaled by the earlier flash reading, and is especially encouraging as it suggests the region saw little overall contagion from the UK’s ‘Brexit’ vote,” Chris Williamson, chief economist at Markit wrote in the report on Wednesday.

A reading above 50 indicates expansion in the sector; below indicates contraction.

As for the particular countries in the eurozone, Germany’s services PMI grew in July from a month before, while France saw its services sector jumping into expansion territory.

The activity in the Spanish services sector worsened more than expected in July, while Italian services PMI expanded at a slightly stronger pace than in June.

“The upturn is being led by surging growth in Germany, where a 0.5% pace of expansion is being signaled. However, France continued to stagnate, acting as a significant drag on the region. 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% in July, Italy is growing at a sluggish 0.2% pace,” Williamson elaborated.

Last month, the European Commission downwardly revised its forecasts for growth in the eurozone as a whole. The bloc is likely to see its growth cut between 0.2 and 0.5 percentage points by 2017 due to Brexit.

Meanwhile, retail sales registered no growth in the sixth month of the year on the monthly basis, data published by EU statistics office Eurostat showed on Wednesday.

Consumer shopping appetite was flat in June on a monthly basis, following the 0.4% build seen previously. Analysts had predicted a 0.1% uptick in June.

Meanwhile, on an annual basis, consumer spending at retailers rose 1.6% during the reported month, the same as in May. Markets had bet on acceleration to 1.7% growth in June.