Investing.com – Euro zone private sector activity unexpectedly grew in June, according to survey data released on Friday.
The preliminary reading of the Markit services purchasing managers’ index came in 55.0 this month from 53.8 in May.
Economists had forecast a reading of 53.7.
The manufacturing PMI fell to 55.0 from 55.5 a month earlier. The reading was in line with forecasts.
The composite output index, which measures the combined output of both the manufacturing and service sectors rose to 54.8 from 54.1, against expectations for 53.9.
A reading above 50.0 on the index indicates industry expansion, below indicates contraction.
“An improved service sector performance helped offset an increasing drag from the manufacturing sector in June, lifting Eurozone growth off the 18-month low seen in May,” IHS Markit chief economist Chris Williamson said.
Williamson said the data suggested growth of 0.5% in gross domestic product for the second quarter.
He also indicated that price pressures were also on the rise again, running close to seven-year highs.
He explained that increases in oil and raw material prices were driving up costs, but wages were also lifting higher.
While Williamson noted that jobs in the services sector were being created at the fastest rate in the past decade, but warned that business expectations were running at one-and-a-half year lows while output continued to increase at a faster rate than incoming new orders.
This expert also warned that manufacturing was looking especially prone to a further slowdown in coming months, with companies citing trade worries and political uncertainty as their biggest concerns. Sentiment about the year ahead in the factory sector has sunk to its lowest since 2015.
“While the June upturn provides some hope that the weakening of official data earlier in the year may have overstated the region’s weakness, the risks remained tilted towards a further slowdown in the second half of the year,” Williamson concluded.