Eurozone: Business activity in the Eurozone gains momentum
August 21, 2015
The Eurozone’s Composite Purchasing Managers’ Index increased in August, suggesting that GDP growth will pick up in Q3 after a disappointing Q2. The indicator rose to 54.1 in August from a revised 53.9 in July (previously reported: 53.7). The print also overshot the 53.7 the markets had expected. The index continues to hover above the 50-threshold that separates expansion from contraction.
According to Markit, the acceleration in activity in August resulted from an improvement in both the services and manufacturing sectors. Markit added that businesses in both sectors indicated that output has risen in response to increasing levels of new work, including stronger growth of new export orders for manufacturers. As a result of these positive readings, businesses in the common-currency area encouraged new job creation, with employment rising for the 10th consecutive month.
At a country level, PMI accelerated in Germany, while in France it slipped relative to the previous month. Moreover, Markit stated that elsewhere in the region, ”output growth remained marked outside of the ‘big-two’ nations in August. Economic growth accelerated to its highest since July 2007, leading to further solid increases in staffing levels at manufacturers and service providers alike.”
Markit concluded that, “The flash PMI suggests that the Eurozone is still experiencing one of its best periods of economic growth and job creation during the past four years. GDP growth is tracking close to 0.4% so far in the third quarter, slightly above the 0.3% seen in quarter 2, highlighting the resilience of the economy through last month’s roller-coaster events of the Greek debt crisis and the ongoing negotiations to tie up the full details surrounding the third bailout.”
Author: Ricardo Aceves, Senior Economist