Business activity in the eurozone this month shows no signs of being hit by Britain’s vote to leave the European Union.
The latest surveys of company executives did find weakness in new orders and hiring but overall the economic outlook is stable though lacklustre.
The composite Purchasing Managers Index (PMI) for the 19 countries using the euro edged up to a seven-month high of 53.3 from July’s 53.2. Any reading above 50 indicates growth.
Chris Williamson, chief economist at Markit which carries out the PMI surveys, said there are “no signs of the recovery being derailed by Brexit uncertainty”.
For the region’s largest economy, Germany, private sector growth slowed in August, but remains robust overall.
Asked about the British referendum vote effect, Jeremy Cook, Chief Economist at the foreign exchange brokers World First, said it is still early days: “If there’s a Brexit impact later on down the line it’s likely to first manifest itself in the political scenarios that we see play out in the eurozone over the course of the next year or so, be that the Italian elections, the Dutch, the French or the German elections in the late part of next year. And that will start to see a fall-off in investment spending, that may see a fall-off in consumer confidence and capital expenditure of businesses.”
French growth better than anticipated, eurozone consumer confidence dips
France enjoyed surprisingly strong growth in August with an upturn in the services sector offsetting continued weakness in manufacturing.
It was the same story across the eurozone with services outperforming manufacturing.
Throughout the region businesses were less optimistic about the future and the fact that new order growth was at its weakest since early 2015 suggested the headline manufacturing PMI may decline next month.
In addition consumer confidence for the eurozone also dipped, apparently a sign of low morale after the British decision to leave the EU.
The European Commission’s flash estimate released on Tuesday showed consumer morale decreased to -8.5 in August from an unrevised -7.9 in July.
Economists had forecast a rebound in confidence this month.
Euro zone consumer confidence -8.5 vs. -7.6 forecast https://t.co/wfKHRCZA4P— mbatrade (@mbatrade) August 23, 2016