Eurozone second quarter GDP growth came in at 0.3 per cent, according to Eurostat. This confirmed an initial estimate published in July. The figure shows that the pace of growth weakened from the first three months of the year, when the currency bloc’s economy expanded by 0.5 per cent.
Recent survey data also suggests that growth is not likely to increase dramatically in the third quarter, despite both the eurozone and the UK economies so far proving fairly resilient to any negative effects of the Brexit referendum. Among the biggest four nations of the eurozone, Germany’s growth weakened to 0.4 per cent from 0.7 per cent, while GDP in France and Italy stagnated in the second quarter. At the same time, Spain’s growth remained unchanged at 0.8 per cent.
A measure of performance of the UK services sector registered a record jump in August, adding to evidence of an economic rebound following the tremors caused by the decision to leave the EU. IHS Markit’s Purchasing Managers Index (PMI) surged to 52.9 from a seven-year low of 47.4 in July. This was the biggest monthly gain since the survey began two decades ago.
Meanwhile, British Prime Minister Theresa May has eliminated a dramatic near-term shake-up of immigration policy that would see EU citizens lose their preferential access to the UK.
Finally, in the US, a report released by the Institute for Supply and Management (ISM) revealed that service sector activity tumbled in August to its lowest level in over six years, signalling slowing growth in the core sectors of the US economy. The ISM stated that the non-manufacturing index fell from 55.5 in July to 51.4 in August. Though the index fell sharply, the service sector stayed in growth territory.
Employment index dropped from 51.4 in July to 50.7 in August, signalling slight job growth in the service sector. The report also said that both the business activity index and new orders index fell from near 60 to less than 52 in August, showing significant slowdowns in growth.
This report was compiled by Bank of Valletta for general information purposes only.