Despite Greek crisis: Eurozone PMI near four year high

Despite macroeconomic turbulences in Greece, June’s Markit PMI for the eurozone, remained at 53.7 basis points, close to the four-year high of 54.2 seen the previous month, suggesting that Eurozone recovery gradually continues.

While the reading was the sixth highest since 2011, average growth in manufacturing and services declined gradually and business expectations dropped to the weakest levels seen this year, largely driven by growing pessimism in Germany and France.

Meanwhile, growth of incoming new business slowed down, according to Markit, the expansion of new business in the service sector was offset by weaker overall growth in manufacturing.

Nevertheless, the threat of deflation eased slightly, with output prices being registered at 49.9 basis points, the highest level since March 2012.

Chris Williamson, chief economist at Markit commented on the results: “Eurozone economic growth lost only slight momentum in July amid the rollercoaster events of the Greek debt crisis during the month. The rate of expansion remained reassuringly robust to suggest that it was by-and-large ‘business as usual’ for the region as a whole.

“The PMI suggests the eurozone continues to enjoy its strongest performance in terms of both economic growth and job creation seen over the past four years. The survey indicates that the economy grew 0.4% in the second quarter and sustained this steady pace at the start of the third quarter” he adds.

“Although business confidence in the service sector hit the lowest so far this year, recent positive developments in relation to Greece suggest the pace of growth could pick up again in coming months. The region should therefore enjoy growth of at least 1.5% this year providing there is no re-escalation of ‘Grexit’ worries, which is of course by no means assured” Williamson stresses.

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