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Euro zone businesses trudged into the second quarter - PMI

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Reuters LONDON,

By Jonathan Cable

LONDON, (Reuters) - Euro zone business growth was slow but steady last month, a survey showed on Wednesday, suggesting the European Central Bank's massive stimulus programme is underpinning activity but not yet boosting inflation. Markit's final composite Purchasing Managers' Index for the bloc, seen as a good guide to growth, was 53.0, in line with a flash estimate and just below March's 53.1. It has been above the 50 mark that divides growth from contraction since mid-2013.

"The final PMI data confirm the earlier flash estimate that the euro zone economy grew at a steady but unspectacular annual rate of 1.5 percent at the start of the second quarter," said

 

Chris Williamson, chief economist at Markit.

"While still tepid, the sustained euro zone growth contrasts with slowdowns in the U.S. and Britain, suggesting the ECB's more aggressive stimulus is helping to drive a steady recovery."

Economic growth was 0.6 percent quarter-on-quarter in the January to March period, early data showed on Friday. That was more than expected, but inflation once again fell below zero

last month.

Euro zone growth will be slower than previously thought, with subdued inflation this year, the European Commission said in its economic forecasts on Tuesday, warning of high external and internal risks to the bloc's economy.

Adding to worries for policymakers who have so far failed to get inflation anywhere near their target of close to but below 2 percent, firms cut prices for a seventh month - and at the fastest pace in over a year.

The index measuring prices charged fell to 48.3 from March's 48.6, below the flash reading of 48.9. It has been under the 50 mark for most of the past four years.

Despite discounting, growth in the bloc's dominant service industry remained muted. The services PMI held steady at March's 14-month low of 53.1 in April, just shy of the flash 53.2.

Service firms were more optimistic about the year ahead, however. The business expectations index rose to 64.5 from 64.3,one of the highest in the past five years.

(Editing by Larry King)

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First Published: May 04 2016 | 10:02 PM IST

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