EU Business Activity Slows But Orders Hint at Recovery in 2H

Euro zone business expanded at the slowest rate in six months in June, a survey showed on Thursday, but new orders poured in at the fastest pace in over three years, suggesting growth will accelerate in the second half of the year.

Activity in France, the bloc’s second-biggest economy,shrank at the fastest rate in four months and even in Germany, the backbone of the common currency area, the pace of growth eased.

Markit’s Composite Purchasing Managers’ Index (PMI), based on surveys of thousands of companies across the region and seen as a good indicator of growth, was in line with a preliminary reading of 52.8, down from May’s 53.5.

The headline PMI for the euro zone’s service industry fell to 52.8 from 53.2, also in line with an earlier flash reading and above the 50 mark that signifies growth.

“At first glance, June’s PMI survey results make grim reading and raise worries that the euro area’s recovery is already fading,” said Chris Williamson, chief economist at Markit.

“Dig a little deeper, however, and there are grounds for optimism. With new orders rising at the fastest rate for three years, the pace of economic growth should also pick up again as we move into the second half of the year.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza