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French private sector output hit a 10-month high in August.
French private sector output hit a 10-month high in August.

Eurozone Sees Marginal Growth

Eurozone Sees Marginal Growth

The eurozone economy accelerated marginally in August, according to Markit’s eurozone composite purchasing managers’ index, which came in at a seven-month high.

The flash reading, out on Tuesday, came in at 53.3, up on 53.2 in July, CNBC reported.

“The August flash PMI indicates the eurozone remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by ‘Brexit’ uncertainty,” Chris Williamson, chief business economist at IHS Markit, said in a report on Tuesday.

He said the PMI data was consistent with economic growth in the 19-country eurozone averaging 0.3% in the third quarter, quarter-on-quarter, or 1.2% annualized. That would be similar to growth seen in the first half of the year.

“While the resilience of the PMI in August will add to the belief the European Central Bank will see no need for any immediate further stimulus, the weakness of the overall pace of expansion and disappointing trends in hiring, order books, business optimism and prices all suggest that policymakers will keep the door open for more stimulus later in the year,” Williamson said.

French private sector output hit a 10-month high in August, suggesting the UK’s vote to leave the European Union was yet to knock nearby economies.

The Markit flash French composite output index rose to 51.6 in August from 50.1 in July.

“France’s private sector economy gathered some momentum in August, raising hopes of a pick-up in GDP growth after the stagnation seen in the second quarter. A stronger contribution from the service sector bolstered overall output, while manufacturing held its ground to halt a recent slide,” Jack Kennedy, senior economist at IHS Markit, said in a report on Tuesday.

  Stuck in Slow Lane

“That said, the trend in incoming new business remains muted while firms indicated a return to job shedding in the latest month, suggesting that the recovery remains stuck in the slow lane,” he added.

The eurozone composite index read 53.2 in July, marginally up on 53.1 on June. Growth was led by Germany, where output growth came in at a seven-month high of 55.3.

Job creation in the eurozone improved, with employment rising at the fastest pace in almost five and a half years, according to Markit. Job growth was at a near five-year high in Germany and a near nine-year record in Italy. Plus, employment edged up in France, after declining in the previous two months.

Eurozone economic data has been in heightened focus since the UK’s vote to leave the European Union on June 23, which is seen knocking confidence in neighboring countries.

 

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