Eurozone Private Sector Growth At 1-Year High

(RTTNews) - The euro area private sector expanded at the fastest pace in a year in August but the overall rate was sluggish as the service sector held back growth, final survey data from S&P Global showed on Wednesday.

The HCOB composite output index rose to 51.0 in August from 50.9 in July. The score was slightly below the initial estimate of 51.1.

Growth was held back by the service sector, which logged a slight and slower upturn, while manufacturing registered its strongest increase in output in almost three-and-a-half years.

The services Purchasing Managers' Index dropped to a four-month high of 50.5 from 51.0 in July. The flash score was 50.7.

"Riding a bike too slowly can make you tip over," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said. "That's the risk facing the eurozone."

"Yes, the economy has been growing since the start of the year, but the pace is painfully slow," said de la Rubia.

The economist said political tensions in France and Spain, uncertainty around the EU-US trade deal, and ongoing troubles in the key automotive sector are not helping.

"On the bright side, increased defense spending across Europe and Germany's infrastructure program offer hope that the economy might keep moving forward - and avoid falling off the bike," the economist added.

Of the largest eurozone nations, Spain was the fastest growing economy, despite the pace of expansion easing. Likewise, growth slowdown was seen for Germany, whereas Italy recorded a slightly faster upturn.

Meanwhile, France remained the weakest-performer, although there were signs of stabilization as the composite output index rose to a 12-month high to post only narrowly below the 50.0 no-change threshold.

Germany's private sector showed another month of marginal activity growth. The HCOB final composite PMI came in at 50.5 in August, which was little-changed from July's 50.6 but below the flash score of 50.9.

The services PMI hit a three-month low of 49.3, down from 50.6 in July. The flash score was 50.1.

France private sector moved close to stabilization in August. The final composite output index improved to 49.8, in line with estimate, from 48.6 in July.

The final services PMI advanced to 49.8 from 48.5 in the previous month. The reading was also above the flash estimate of 49.7. The index reached its highest level in exactly a year. Spain's private sector growth softened in August. Slower growth was driven by the services economy as manufacturing output rose at its fastest rate since last October.

The composite output index posted 53.7, down from 54.7 in July. The services PMI dropped more-than-expected to 53.2 from 55.1 in the previous month. The reading was seen at 54.4.

Italy's private sector registered its strongest growth in three months in August. The composite output index rose to 51.7 from 51.5 in July. The slight improvement in the headline reading masked movements at the broad sector level, as renewed growth in manufacturing output outweighed a softer services expansion. The services PMI fell to 51.5 from 52.3 in the previous month. The reading was seen at 52.1.