Euro-zone business growth slows amid price-cutting
Reuters in London and New York
The euro zone's private sector expansion unexpectedly slowed this month even though companies are still cutting prices to drum up business, a survey showed yesterday.
German business activity expanded robustly, albeit at a slower pace than last month, while France's private sector shrank at the fastest rate in four months.
"The overall picture is one of fairly sluggish growth as opposed to any rip-roaring acceleration," said Chris Williamson, financial data firm Markit's chief economist.
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, fell to 52.8 from May's 53.5, missing the consensus for 53.5 in a poll of analysts and matching the lowest forecast.
Readings above 50 indicate expansion, and Williamson said that with a robust recovery evident in periphery countries the data still points to second-quarter economic growth of 0.4 per cent.
Germany, Europe's largest economy, was again the driving force although its composite PMI eased to 54.2 from 55.6.
But the French index slumped to 48.0 from 49.3, its lowest reading since February.
"In France the weakness does seem to be quite set in and there is little prospect for any improvement as we move into the second half," Williamson said.
Meanwhile, the US manufacturing sector expanded more strongly than expected, with the rate of growth hitting its highest level in more than four years.
Markit said its preliminary US manufacturing purchasing managers index rose to 57.5 this month, above economist expectations for 56.5 and the highest reading since May 2010. Last month's final reading was 56.4.