Euro Zone PMI Rises Above Expectations Post Brexit

Euro zone business activity expanded a touch faster than expected last month as the region appeared, so far, to have largely shrugged off Britain’s vote to leave the European Union, a survey found.

The latest increase, which came alongside some of the fastest hiring growth in the euro zone since before the financial crisis in 2008, was led by a surge in Germany, masking stagnation in France and a slower pace in Spain and Italy.

Euro zone business growth is now in stark contrast to Britain, where a survey suggested its economy is shrinking at the fastest rate since the financial crisis after a sharp hit to activity following the EU referendum in June. [GB/PMIS]

Markit’s final composite Purchasing Managers’ Index for the euro zone, released on Wednesday, was 53.2 in July, above a flash estimate of 52.9 and June’s 53.1. It has been above the 50 mark that divides growth from contraction since mid-2013.

“The composite PMIs have held up a little better than people expected after the UK’s Brexit vote but that doesn’t change the fact that growth is still weak and not doing enough to pick up core inflation,” said Stephen Brown at Capital Economics.

“Even though the composite PMIs and surveys have done a bit better than expected that doesn’t change the fact that there is still pressure on the ECB to take more action.”

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