Investing.com - Economic activity in the euro zone unexpectedly rose to a seven-month high in August, despite the surprise decrease in the manufacturing sector, preliminary data showed on Tuesday.
In a report, market research group Markit said that its flash Euro Zone Composite Output Index, which measures the combined output of both the manufacturing and service sectors ticked up from 53.2 in July to 53.3 in August. That was a seven month high and settled above forecasts for a drop to 53.1.
The flash services purchasing managers’ index registered a surprise increase to 53.1 this month, from July’s final reading of 52.9. That was a three month high and beat expectations for a lower reading of 52.8. The
The preliminary euro zone manufacturing purchasing managers’ index fell to a seasonally adjusted 51.8 this month from a final reading of 52.0 in July, marking a three month low. Analysts had expected the index to remain steady at 52.0 in August.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Markit noted in the report that the composite reading was only slightly above the average seen throughout the year to date, suggesting that growth in the third quarter is likely to be similar to that seen in the first half of the year.
Commenting on the release, Chris Williamson, Chief Economist at Markit said, ““The August flash PMI indicates that the eurozone remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by ‘Brexit’ uncertainty.”
Williamson said that the data suggested that the euro zone economy was growing at a quarterly rate of 0.3% in the third quarter, or an annual rate of 1.2%.
“While the resilience of the PMI in August will add to the belief that the ECB will see no need for any immediate further stimulus, the weakness of the overall pace of expansion and disappointing trends in hiring, order books, business optimism and prices all suggest that policymakers will keep the door open for more stimulus later in the year.,” Williamson concluded.
EUR/USD was at 1.1342 from around 1.1343 ahead of the release of the data, while EUR/GBP was at 0.8601 from 0.8603 earlier.
Meanwhile, European stock markets were higher. The Euro Stoxx 50 gained 1.01%, Germany's DAX rose 0.83%, France’s CAC 40 advanced 0.74%, while London’s FTSE 100 traded up 0.74%.