Eurozone PMI Shows Modest Growth, No Recession

Markit has released its final data for the services section PMI across the eurozone. It covers the month of August. While growth is sluggish, the figure has not dropped below the critical number of 50 that signals contraction.

According to Markit:

The IHS Markit Eurozone PMI Composite Output Index signalled the continued expansion of the euro area private sector during August. Growth nonetheless remained modest, despite improving slightly since July. After accounting for seasonal factors, the index posted 51.9, compared to 51.5 in the previous month.

There has been ongoing worry about the effects of the trade war between the United States and China might dent eurozone numbers. The other two causes for anxiety are Brexit, which may undermine confidence as the United Kingdom decides how it will hand the split, and Germany as the eurozone’s largest economy tilts toward recession.

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Markit experts pointed out:

At the national level, France performed best, with growth driven by a solid service sector performance and a renewed rise in manufacturing output. Spain also registered solid growth, and the fastest in four months, whilst modest gains in output were seen in both Germany and Ireland.

The German number was a particular surprise.

Chris Williamson, chief business economist at IHS Markit wrote:

The eurozone remained mired in a fragile state of weak and unbalanced growth in August, Although up on July, the latest reading indicates that GDP will rise by just 0.2% in the third quarter, assuming no substantial change in September. Official data available so far for the quarter suggest growth could be even weaker. The picture remains very mixed both by sector and country, highlighting how downside risks persist. A fierce manufacturing downturn, fuelled by deteriorating exports and most intensely felt in Germany, continues to be offset by resilient growth in the service sector, in turn propped up to a large extent by solid consumer spending in domestic markets.

No recession in the region, for now.

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