Eurozone Markit PMI Data Fall Less Than Expected in July

Purchasing managers' indices point to manufacturing resilience in the wake of the Brexit vote, and a continued gulf between growth rates in Germany and France.
By Laura Board ,

Closely watched barometers of  eurozone industrial and services sector sentiment fell less than expected in July, indicating resilience in the aftermath of the U.K.'s June 23 vote to leave the European Union but weakness in the services sector.

Markit Economics said its purchasing managers' composite index fell in July to 52.9 from 53.1 in June, above forecasts for a reading of 52.5 though still at an eighteen-month low. The eurozone services index was also at an 18-month low of 52.7, while the manufacturing index fell to 51.9, easing slightly from June's six-month high. All three indices beat forecasts.

Markit said the overall growth rate weakened only slightly from the average this year, aided by rising employment and by a weaker euro continuing to bolster exports. Markit also noted that manufacturers' purchase prices rose for the first time in a year.

"The eurozone economy showed surprising resilience in the face of the U.K.'s vote to leave the EU and another terrorist attack in France," said Markit chief economist Chris Williamson. "The overall rate of economic growth is largely unchanged, suggesting GDP is growing at a sluggish but reasonably steady annual rate of around 1.5%.

"It's especially encouraging to see employment growth continuing to improve, with firms' appetite to hire seemingly so far unaffected by the uncertainty caused by the Brexit vote, especially in Germany," he added.

But he noted that "fragility of the recovery leaves plenty of room for speculation about further stimulus later this year."

European Central Bank chief Mario Draghi said the bank would monitor data to gauge the impact of Brexit "in the coming months" but signaled he remained open to further easing.

European stock indices remained down after the data, with the Dax in Frankfurt off 0.35% at 10,120.40 and the Cac 40 down 0.26% at 4,364.72. In London the FTSE 100 was down 0.20% at 6,686.21.

The euro edged up 0.09% against the dollar at $1.1035.

Preliminary July purchasing managers' indices for France, the eurozone's second-largest economy, had earlier on Friday showed the manufacturing index rose to a four-month high, instead of falling, as expected, while the composite and services indices were at two-month highs. But although all indices beat forecasts the manufacturing index remained below the 50 threshold which separates expansion from transaction; and the services and composite indices edged only just above that.

In Germany, the composite and services indices unexpectedly rose, while the manufacturing index fell less than expected. The composite index, at 55.3, up from 54.4 in June, came in at a seven-month high.

U.K. data is out shortly.

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