Eurozone business activity strong despite Brexit: survey


23rd August, 2016 06:13:41 printer

Eurozone business activity strong despite Brexit: survey

Eurozone economic activity edged higher in August with few signs that Brexit-linked dangers were yet hurting the European economy, a closely watched survey showed Tuesday.

Data monitoring company Markit said the eurozone economy maintained its resilience despite Britain's shock vote to leave the EU, with a strong showing from France as well as powerhouse Germany.

Markit said the preliminary August reading for its Composite Purchasing Managers Index (PMI) for the eurozone rose to a seven-month-high of 53.3 points, up from 53.2 in July.

The PMI measures companies' readiness to spend on their business and so gives a good idea of how the underlying economy is performing before official statistics are compiled and released.

Any reading above 50 points indicates the economy is expanding.

Markit chief economist Chris Williamson said the eurozone economy "remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by 'Brexit' uncertainty."

Williamson said the better-than-expected August figures suggested the eurozone economy was growing at "1.2 percent (over 12 months), which is similar to that seen on average over the first half of the year."

The IMF said last month that eurozone growth this year would hit a stronger-than-expected 1.6 percent, instead of the previously forecast 1.5 percent.

The fund warned however that growth in the currency bloc would drop to 1.4 percent next year as the Brexit effects kicked in.

Howard Archer of IHS Insight said the "PMI data are pretty reassuring, suggesting that Eurozone economic activity is - for now at least - not being hampered by the UK's shock Brexit vote."

Nevertheless, the data "by no means give the all clear on Eurozone growth prospects as there were mixed developments", including slowing employment and lower growth in new orders by businesses, he added.