Continental Europe’s main economies took increasingly divergent paths towards recovery in August, with Germany and France indicating growth but Spain’s services sector tipping into contraction.
According to the purchasing managers’ index (PMI), a survey of 4,500 euro area companies compiled by London-based data and research group Markit, the services sector reported improvement, albeit uneven, but fears over southern Mediterranean performance deepened.
A combined manufacturing and services index for the 16-nation eurozone fell to a slightly upwardly-revised 56.2 points from 56.7 points in July, when it had accelerated for the first time in three months. Any score above 50 indicates a trend towards growth.
The services-only index rose slightly to 55.9 in August, with Ireland - on tenterhooks over the health of its banking sector - also reporting growth alongside Italy.
Markit said that service sector growth showed the second largest monthly rise over the past three years, but manufacturing growth slowed to a three-month low.
However, the divergences between the big economies that share the euro currency “widened” significantly.
While the German service sector expanded “at the fastest rate for three years”, Spain saw its rate of output growth slip back “to near-stagnation” in August as its service sector “fell back into contraction”.
Employment also fell for the 31st month in a row in Spain, which Markit chief economist Chris Williamson said suggested “little hope of an improvement in the country’s 20 per cent unemployment rate in the near future.”
“The main concern remains the continued dependence of the recovery on France and Germany,” added colleague Rob Dobson, with rates of activity expansion for the big two “still far-and-away above those seen on average elsewhere”.
According to London-based IHS Global Insight analyst Howard Archer, “the suspicion remains that eurozone growth will moderate over the coming months in the face of tighter fiscal policy increasingly impacting in a number of countries and also slower global growth”.