Eurozone Private Sector Regains Momentum In June

Eurozone private sector regained some momentum in June fueled by an improved service sector performance, while the pace of growth in manufacturing activity waned.

The composite output index rose unexpectedly to 54.8 in June from 54.1 in May, flash data from IHS Markit showed Friday. The score was forecast to fall to 53.9.

While an improvement was reported from the 18-month low seen in May, the June reading represented the second-weakest expansion seen over the past 17 months.

The services Purchasing Managers' Index in the currency bloc rose to 55.0 in June from 53.8 in May. Economists had expected the score to remain unchanged at 53.8.

Meanwhile, the factory PMI fell to 55.0 in June from 55.5 in the previous month. The score matched economists' expectations.

With growth kicking higher in June, the surveys are commensurate with GDP rising 0.5 percent in the second quarter, Chris Williamson, chief business economist at IHS Markit, said.

June's rise in the euro-zone PMI provides some reassurance that the softness recorded so far in 2018 is not the start of a sustained downturn, and that the pace of GDP growth will remain fairly healthy, Jessica Hinds, an economist at Capital Economics, said.

The economist said today's data will reassure the European Central Bank that it is right to be winding down its asset purchase programme this year.

By country, both France and Germany saw business activity accelerate in June, albeit with stronger service sector expansions impeded by slower manufacturing growth.

France's flash composite output index rose to 55.6 in June, while the reading was forecast to remain unchanged at 54.2.

There was a noticeable divergence between the two principal sectors covered by the survey in June. The services PMI rose to 56.4 in June from 54.3 in May. The expected reading was 54.3.

Meanwhile, the manufacturing PMI fell to a 16-month low of 53.1 in June from 54.4 in May. The score was forecast to drop moderately to 54.0.

Elsewhere, Germany's private sector activity picked up from a 20-month low in May. The composite PMI rose to 54.2 in June from 53.4 in May. However, the growth rate was still the second-lowest over the past 21 months.

The services PMI climbed to a 3-month high of 53.9 from 52.1 in May. The index was forecast to increase to 52.2.

Meanwhile, manufacturing output growth slowed for the first time in six months to an eighteen-month low in June. The manufacturing PMI slid to 55.9 from 56.9 in May. The expected score was 56.3.