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Eurozone business activity strong despite Brexit: survey

Eurozone

BRUSSELS: Eurozone economic activity edged higher in August with few signs that Brexit-linked dangers were yet hurting the European economy, a closely watched survey showed Tuesday.

Data monitoring company Markit said the eurozone economy maintained its resilience despite Britain’s shock vote to leave the EU, with a strong showing from France as well as powerhouse Germany.

Markit said the preliminary August reading for its Composite Purchasing Managers Index (PMI) for the eurozone rose to a seven-month-high of 53.3 points, up from 53.2 in July.

The PMI measures companies’ readiness to spend on their business and so gives a good idea of how the underlying economy is performing before official statistics are compiled and released.

Any reading above 50 points indicates the economy is expanding.

Markit chief economist Chris Williamson said the eurozone economy “remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by ‘Brexit’ uncertainty.”

Williamson said the better-than-expected July figures suggested the eurozone economy was growing at “1.2 percent (over 12 months), which is similar to that seen on average over the first half of the year.”

The IMF said last month that eurozone growth this year would hit a stronger-than-expected 1.6 percent, instead of the previously forecast 1.5 percent.

The fund warned however that growth in the currency bloc would drop to 1.4 percent next year as the Brexit effects kicked in.

Howard Archer of IHS Insight said the “reasonable” PMI data “suggest the Brexit vote so far has not markedly hampered economic activity.”

The preliminary German composite index fell to a still strong 54.4 points, with companies booking fewer new orders than expected.

France’s PMI jumped to 51.6 points, the struggling economy’s sharpest rise in 10 months.

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