|08-24-2014, 02:00 PM||#1|
Eurozone recovery `subdued and fragile`, UK remains on track
A timid economic recovery in the Eurozone is still holding, a closely-watched Purchasing Managers’ Index survey showed last week, but at a pace that promises only negligible growth for the year.
Markit`s set of leading indicators - the purchasing managers` index (PMI) – showed activity in the Eurozone’s manufacturing sector slowed to a 13 month low in August, with the euro zone manufacturing PMI down to 50.8 from 51.8 in July. The region’s services PMI slid to 53.5.
This followed official data that showed the Eurozone ground to a halt in the second quarter, with none of the bloc`s three biggest economies - Germany, France and Italy – registering notable growth.
Broken down by country, Markit data continued to show fragility in the top economies of France and Germany. French services sector managed to hit the 50 mark in July after three straight months of contraction.
Activity in Germany’s factor sector slowed but remained solid, with the German manufacturing PMI down to 52.0. The country’s services PMI ticked down to 56.4 from 56.7 last month.
The ECB in June launched a group of measures to help kick-start the bloc`s economy; including taking one of its key rates into negative territory for the first time, but has declined to move further.
Any extra ECB action would likely aim to stimulate lending and business activity and also weakens the euro, which would help exporters and tend to push up prices.
Last week, Bank of England policymakers broke ranks over interest rates for the first time in three years this month, when two unexpectedly voted to tighten policy and revived speculation about a 2014 rate hike.
Martin Weale and business economist Ian McCafferty both voted to raise interest rates to 0.75 percent from 0.5 percent
Speculation for an interest rate hike before 2015 had been all but stubbed out after last week’s dovish Bank of England (BoE) inflation report.
However, in an interview Carney suggested that he would not wait for real wages to increase before a rate hike from the current record low 0.5%.
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