Eurozone Private Sector Growth Slowest In 1-1/2 Years

(RTTNews) - Eurozone private sector expanded at the weakest pace in 18 months in July, but remained resilient in the face of the surprise "Brexit" vote and the terror attack in France.

The relief from serious economic concerns could be short-lived, as feared by the European Central Bank policymakers, who signaled on Thursday that they stand ready to pump more stimulus in the coming months.

The flash composite output index fell to 52.9 in July, an 18-month low, from 53.1 in June, preliminary results of a survey by Markit showed Friday. Economists had forecast a weaker score of 52.5.

The reading signaled a marginal easing in the output growth across both manufacturing and services.

The services Purchasing Managers' Index, or PMI, dropped marginally to 52.7 from 52.8 in June. The score was expected to drop to 52.3.

At the same time, the manufacturing PMI slid more-than-expected to 51.9 from 52.8 in the previous month. Economists had forecast a reading of 52 for July.

"The eurozone economy showed surprising resilience in the face of the UK's vote to leave the EU and another terrorist attack in France," Markit Chief Economist Chris Williamson said.

In the June 23rd referendum, 52 percent Britons opted to leave the European Union.

The overall rate of economic growth is largely unchanged, suggesting GDP is growing at a sluggish but reasonably steady annual rate of around 1.5 percent, said Williamson.

Further, private sector employment continued its rising trend for a fourth month and grew at the fastest rate for almost five-and-a-half years as companies boosted capacity in line with the overall upturn in the economy, the survey said.

That said, it remains uncertain whether the boom in job creation will continue as the service sector confidence weakened due to the uncertainty created by "Brexit".

Meanwhile, export growth slowed marginally, partly due to weaker sales to the U.K. amid the referendum and a weakening pound.

Input cost inflation hit a one-year high driven by a weak currency and rising oil prices, while selling prices continued to decline marginally.

Preliminary data for the German private sector showed that output growth was the fastest thus far this year during July, leading to one of the strongest job creation by companies in the last five years.

While the German manufacturing PMI eased slightly to 53.7 from 54.5, the services indicator climbed to 54.6 from 53.7. The Composite PMI rose to a seven-month high of 55.3 from 54.4.

In France, private sector activity stabilized after declining in the previous month as service sector expanded. The Composite PMI rose to 50 from 49.6. The manufacturing measure climbed to 48.6 from 48.3 and the services indicator increased to 50.3 from 49.9.