The trading week in Europe kicked off with strong economic news from the Euro Zone on Monday. However, growth in French business activity eased in August.
Euro zone business activity stayed strong in August, only dipping slightly from July’s two-decade high rate.
IHS Markit’s Flash Composite Purchasing Managers’ Index, regarded as a reliable indicator of the health of the economy, eased from 60.2 last month to 59.5 in August. This month’s figure also fell slightly short of the analyst’s estimate for 59.7.
A widespread and fast vaccination drive has enabled more businesses to reopen and customers to venture out.
Manufacturers posted another solid month. The Euro zone manufacturing PMI remained well above the breakeven mark at 61.5, but down from July’s 62.8 and lower than market expectations for 62.0.
An index measuring output that feeds into the composite PMI fell from 61.1 to 59.2.
Chris Williamson, chief business economist at IHS Markit said of today figures:
“The euro zone’s economic recovery retained impressive momentum in August, with the PMI dipping only slightly from July’s recent high to put its average in the third quarter so far at the highest for 21 years,”
“Supply chain delays continue to wreak havoc, however, leaving companies frequently unable to meet demand and pushing firms’ costs higher.”
“Encouragement comes from a second month of job creation at the strongest for 21 years, which reflects efforts by firms to boost operating capacity and meet demand,”
Chris Williamson, chief business economist at IHS Markit
Growth in France Falters
According to initial forecasts in a keenly watched monthly survey, French business activity eased in August from July.
IHS Markit reported that its preliminary Purchasing Managers’ Index (PMI) for France’s dominant services sector declined to 56.4 points in August. This month’s figure was down from 56.8 recorded in July and below market expectations for a reading of 57.0.
The August preliminary manufacturing PMI in France also declined to 57.3 from July’s 58.0. It was also lower than market expectations for a reading of 57.8.
The overall August preliminary composite PMI declined from 56.6 in July to 55.9in August.
As with all the readings. above the 50-point threshold indicates an economy in expansions. Readings below the 50-point mark indicate an economy in contraction.
