Eurozone businesses lost some momentum in June but still strong

[LONDON] Eurozone businesses lost some momentum in June but chalked up their best performance last quarter in over six years, according to surveys that showed companies started the second half of 2017 in rude health.

IHS Markit's final composite Purchasing Managers' Index for the euro zone was 56.3 in June, down from May's 56.8 but comfortably beating a flash estimate of 55.7. It has been above the 50 mark that divides growth from contraction since mid-2013.

"The final headline PMI came in above the earlier flash estimate and consequently signalled only a very slight loss of growth momentum at the end of the second quarter," said Chris Williamson, chief business economist at IHS Markit.

Mr Williamson said the latest readings were indicative of the eurozone economy having grown 0.7 per cent in the second quarter, faster than the 0.5 per cent rate predicted in a Reuters poll last month.

Suggesting the momentum might be regained this month, backlogs of work increased as new business during June came in at the second-fastest rate in over six years. The sub-index nudged up to 56.0 from May's 55.9.

"The dip in the PMI in June certainly doesn't look like the start of a slowdown. The added encouragement to the healthy picture is the broad-based nature of the upturn signalled for economic growth, employment and prices," Mr Williamson said.

Earlier PMIs from the bloc's big four economies of Germany, France, Spain and Italy showed faster growth in the second quarter as a whole.

A PMI covering the bloc's dominant service industry fell to 55.4 from the previous month's 56.3 but was ahead of the 54.7 flash reading.

Suggesting businesses remained confident, they sped up hiring last month. The services employment index rose to 53.9 and has only been higher once - in March - since early 2008.

REUTERS