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Eurozone growth edges down to one-and-a-half year low

Staff Writer | July 23, 2016
Euro area business activity growth edged lower in July, according to the Markit Eurozone Flash PMI, dropping to an 18-month low.
Eurozone growth
Europe   Markit Flash Eurozone PMI
July’s flash PMI reading of 52.9 compared to 53.1 in the prior two months and signalled only a marginal easing in the rate of growth of output across both manufacturing and services.

However, the overall pace of growth remained only slightly slower than the average seen so far this year, and employment rose at the fastest rate for almost five-and-a-half years as companies boosted capacity in line with the overall upturn in the economy.

Rates of expansion moderated slightly in both sectors, slipping to a one-and-a-half year nadir in services but merely easing to a two-month low in manufacturing. The relatively stronger performance in manufacturing was helped by a further upturn in new export orders, in turn linked to the weaker euro.

However, export growth slowed fractionally from June’s six-month high, in part due to weakened sales to the UK which were often blamed on the UK referendum and the weakening pound.

Although still signalling only modest economic growth, the surveys have now registered a continual expansion of eurozone business activity for 37 months, a sustained expansion which has given many firms increasing confidence to hire additional staff.

Employment across the two sectors subsequently rose in July at the fastest rate since February 2011, the rate of job creation having steadily improved over the past four months. The service sector led the job market upturn, taking on extra staff to the greatest extent seen since February 2008.

While factory hiring slowed and remained subdued by comparison, July nevertheless saw one of the largest gains in manufacturing employment recorded over the past five years.