Concerns over eurozone recovery revived
CONCERNS about the strength of the economic recovery in the eurozone were revived yesterday when a key survey pointed to a slowing of activity in June for the second successive month.
The eurozone composite purchasing managers' index, measuring activity in both the services sector and manufacturing, dropped to a three-month low of 56.0 in June.
With anything over 50 indicating expansion and anything below contraction, the figure pointed to expansion but nonetheless was down on the May figure of 56.4.
The reading, based on surveys of about 2,000 businesses in a variety of sectors, came despite a continued pick-up in manufacturing output growth. Markit, which compiles the composite index, also warned there were signs that growth could slow further in its new orders index, which fell for the second month in a row, registering its weakest monthly increase in new business since February. It said that growth in new orders had slowed in both manufacturing and services.
Chris Williamson, chief economist at Markit, said that the composite figure pointed to "ongoing robust expansion". He said that the June reading was well above the long-term average of 53.4 and added: "The flash PMI suggests GDP growth will have accelerated in the eurozone in the second quarter, perhaps to a robust 0.6-0.7pc pace.
"Growth is led by manufacturing and, in particular, exports. However, the downturns in growth of output, new orders and exports towards the end of the quarter suggest that economic growth will moderate as we move into the second half of the year."