Speed of European rebound still driven by France and Germany

ECONOMIC recovery in the 16-country Eurozone eased in August but employment continued to rise for the fourth consecutive month, Markit’s flash purchasing managers’ index (PMI) showed yesterday.

The composite index slipped slightly to 56.1 from 56.7 in July but remained well above the 50 level that separates expansion from contraction. Manufacturers reported a faster increase in new orders and service providers also saw a slight pick up in the rate of increase in new business, reflecting better domestic conditions.

But Markit warned: “The solid outcome at the headline level masked worrying divergences between the national economies, as growth remained particularly dependent on Germany and France.”

“There is little evidence to suggest that buoyant business conditions in the region’s core nations are spilling over to the benefit of the periphery, meaning an increasing divergence in the Euro area’s two-speed recovery,” said Markit’s Chris Williamson.