Figures from Markit’s Eurozone purchasing managers’ index (PMI) in June suggest that the currency bloc’s pace of growth remains sluggish.
June’s figure of 52.8, released yesterday, was down by 0.7 points from May, after April’s recent peak of 54. Any figure above 50 indicates growth.
The periphery of the Eurozone, which was hardest-hit by the financial crisis and subsequent double-dip recession, is now rebounding at the fastest pace. With a reading of 54.6, the economies on Europe’s fringe are now growing more quickly than Germany for the first time since 2006, according to the index.
French business activity also dropped for the second month running, to a score of just 48. The country’s manufacturing firms reported the lowest output in six months, with a figure of just 47.8.
“The PMIs continue to point to modest growth, but without any hint that there is momentum building in the recovery,” said James Ashley, chief European economist at RBC Capital Markets.
Markit’s figures did suggest some nascent and welcome inflationary pressures in the euro area. Average input costs rose at the fastest pace since November, with service sector costs rising for the first time in a year and a half.
“Concerns about deflation will also be soothed to some extent by prices charged falling only very modestly, dropping to the smallest extent for over two years. However, this is in part due to rising costs, notably higher oil prices,” said Markit chief economist Chris Williamson.
Currently, inflation is running at just 0.5 per cent in the euro area, the joint-lowest level in five years and far below the European Central Bank’s two per cent target.