Eurozone Private Sector Growth Moderates In July

Eurozone private sector started the third quarter on a solid footing, but the pace of growth slowed for the second successive month in July, largely due to the moderation in the manufacturing sector.

The composite output index fell to a 6-month low of 55.8 in July from 56.3 in June, flash data from IHS Markit showed Monday. The reading was expected to drop marginally to 56.2.

Despite coming off recent highs, the index remained at an elevated level by historical standards and signaled one of the strongest expansions seen over the past six years, IHS Markit said.

The flash services Purchasing Managers' Index remained unchanged at 55.4 in July. The expected reading was 55.5.

On the other hand, the factory PMI declined more-than-expected to 56.8 in July from 57.4 in June. The score was seen at 57.2.

"The survey data are historically consistent with GDP rising at a quarterly rate of 0.6 percent, cooling slightly from a pace of over 0.7 percent signaled for the second quarter," Chris Williamson, chief business economist at IHS Markit, said.

It is too early to know for sure whether the economy has merely hit a speed bump or whether the upturn is already starting to fade, the economist said.

The evidence so far points to the former, with the economy hitting bottlenecks due to the speed of the recent upturn, Williamson added.

Looking at the data by country, strong rates of expansion continued to be seen in France and Germany, though both countries saw growth wane for a second successive month.

Germany's composite PMI slid to 55.1 in July from 56.4 in the previous month. The reading suggested the weakest expansion since January.

Nonetheless, output has risen continuously since May 2013, the second-longest sequence of growth since the series started in January 1998.

The flash services PMI fell unexpectedly to 53.5 from 54.0 in June. It was forecast to rise to 54.3. At the same time, the manufacturing PMI dropped to a three-month low of 58.3 from 59.6 in the previous month, while it was forecast to fall moderately to 59.2.

Elsewhere, France's private sector output grew at the slowest pace in six months in July. The composite output index fell to a 6-month low of 55.7 in July from 56.6 in June.

Softer increases in output were seen across both manufacturers and service providers in July.

The services PMI dropped more-than-expected to 55.9 from 56.9 a month ago. The expected reading was 56.4.

Meanwhile, the factory PMI rose to a 75-month high of 55.4 in July, while it was forecast to remain unchanged at 54.8.

by RTT Staff Writer

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