Euro zone manufacturing businesses clocked their best month of growth in six-and-a-half years in August, offsetting the weakest services growth in seven months and keeping overall activity on steady path, a survey of private companies showed on Wednesday.
IHS Markit’s Flash Eurozone Composite Purchasing Managers’ Index, considered a good guide to economic growth, edged up in August to 55.8 from 55.7 in July, slightly above the Reuters poll median estimate of 55.5. Anything above 50 is expansionary.
Manufacturing activity grew at the fastest pace since April 2011, based on the strongest new export orders performance since February of that year. The euro zone manufacturing PMI rose to 57.4 from 56.6, beating the Reuters poll median forecast of 56.3, driven in by performance in Germany.
But the PMI measuring euro zone services activity dipped to 54.9 from 55.4, the weakest in seven months, along with a slowdown in new orders growth. The services business expectations index fell to 63.5 from 65.3, also its lowest since the start of the year.
Asked to explain the recent knock in confidence on a teleconference, IHS Markit associate director Andrew Harker said: “I would not read too much into it.”
The latest survey data point to 0.5 percent overall economic growth in the single currency bloc during the July-September period, compared with 0.6 percent in the previous quarter, IHS Markit said. That was a slight downgrade from July.
“The latest PMI readings for the euro zone signal a continuation of the recent strong performance of the currency bloc’s economy. This stabilisation in the rate of expansion is pleasing, following signs of growth easing in recent months,” Harker said.
That growth projection for the third quarter is higher than the 0.4 percent consensus among economists from the latest Reuters poll.
“Overall, this is another positive set of numbers for the euro area, which continues to enjoy its best growth spell for a number of years,” Harker said.
Price pressures, while subdued, accelerated slightly. The Composite PMI output prices index rose to 52.2 from 51.7, the highest since May.
Growth in hiring slowed slightly in both services and manufacturing, but remained solid, according to the survey.