Eurozone buying index rises for fifth month

Activity in the manufacturing and service sectors of the 16 eurozone countries firmed for the fifth month running in August while still contracting, a key survey of buying managers showed yesterday.

The index of purchasing managers' activity in the manufacturing and services sectors by the Markit survey company put the index at 47.0 points, higher than an earlier estimate and topping the 44.6 recorded in June.

It is the highest reading since August 2008, with the figures buoyed by near-stabilisation in Germany.

However, output has now fallen for 14 months in what has been by far the longest and deepest downturn in the 11-year history of the PMI survey.

Germany, Europe's industrial powerhouse, enjoyed a record rise in its index figures, allowing the eurozone as a whole to post the higher-than expected figures.

In contrast France was the only country to see an increased rate of business decline, contrasting with easings in the previous four months.

The figures do not include Britain which is outside the eurozone. But overall the survey continues to reflect underlying weakness in these sectors because only a reading above 50 points signals expansion.

The new data "will raise hopes that the eurozone economy could stabilise in the second half of the year, led by manufacturing, where production recorded only a marginal fall in July," Markit chief economist Chris Williamson said.

"Services continue to lag, however, largely due to weak domestic consumption as employment continued to fall, which will most likely act as a drag on any recovery."

Activity in the services sector firmed to 45.7 points in July from 44.7 points in June, the slowest rate of contraction since last October.