Survey Indicates Eurozone Recovery Faltering

Economic activity in the eurozone dipped this month to its lowest rate in six months, with ‘robust’ activity in Germany undermined by a sharper downtown in France, a survey indicates.

The Markit purchasing managers’ index (PMI) for private sector activity fell to 52.8 in June from 53.5 in May. While a figure above 50 indicates growth, Markit said that the latest reading indicated that a recent recovery in the eurozone was ‘losing momentum’.

“The big concern is once again the divergent trends within the eurozone,” said Markit’s chief economist, Chris Williamson. “Although the survey suggests the eurozone as a whole should grow by at least 0.4% in the second quarter, France appears to be entering a renewed downturn after gross domestic product [GDP] stagnated in the first quarter.’

Markit believes that the eurozone’s biggest economy, Germany, will record growth of 0.7% in Q214, in contrast to a continuing slowdown in France, the region’s second-biggest economy.

Businesses have continued to cut prices to boost sales this month, but have felt the impact of pressures such as increased oil prices, the survey found.

However, manufacturing and services output rose for the 12th month running.

Williamson added that improving orders in the services sector could also help to revive growth in the eurozone.

The rate of economic recovery in the regions has been a concern for the International Monetary Fund (IMF), which last week said that the recovery had not been strong enough. Earlier this month, the European Central Bank (ECB) introduced a raft of measures to provide an economic stimulus, including negative interest rates and cheap long-term loans to banks.

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