Eurozone private sector PMI at 15-month high

The private sector in the eurozone was up at a 15-month high, beating expectations, however, thanks to a continued slide in new orders a full recovery was still some way off reports Reuters.

Markit's Flash Eurozone Composite Purchasing Managers' Index (PMI), a combination of the services and manufacturing sectors and seen as a guide to growth, increased to 48.9 in June from 47.7 in May.

The level was its highest since March 2012, beating forecasts in a Reuters poll of 23 economists for a more modest upturn to 48.1, however, the index had been below the 50 mark that separated growth from contraction for all apart from one of the last 22 months.

Chris Williamson, chief economist at Markit, said the most encouraging picture was outside of France and Germany where the rest of the region was seeing the weakest rate of decline for two years.

He said at the rate, stabilisation could be expected in the third quarter with growth appearing in the fourth. He added it was  corresponding with the view of policymakers, of the second half of the year looking much better.

However, in a sign that a full recovery had not yet taken hold, new orders were down for the 23rd month, although the subindex increased to 47.4 from 46.8.

The data would come as good news for the European Central Bank, with the decline easing across the 17-nation bloc.

Markit's Flash Eurozone Composite Purchasing Managers' Index, which made up around 85 per cent of the final reading and was seen as a reliable economic growth indicator for the bloc, was up at 48.9 in June from 47.7 in May.

The euro zone had been in recession for a year and a half and according to Markit the latest PMI data suggested the economy would contract 0.2 per cent in the current quarter.

The ECB has come under growing pressure to take more action to help bring a quicker end to the bloc's longest recession, but economists polled by Reuters last month did not predict any easing of policy in coming months.

A PMI related to services, which make up the bulk of the bloc's economy, was up to 48.6 last month from 47.2, its highest reading since January.

The flash manufacturing PMI inched up to 48.7 from 48.3, beating forecasts for 48.6. However, following the pattern over every month for the last two years, some of that activity was generated by running down backlogs of work.

An earlier flash composite PMI from Germany was up to a four-month high of 50.9 however, in France, the index stood down, below the 50 mark for the 16th month at 46.8, which though came as a solid improvement on May's 44.6.