Economic expansion slows as service sector cools

“Lower production reflected a further decrease in new orders“. In fact, from March, input prices for manufacturing companies have increased at a faster pace than output prices, indicating companies are unable to pass on price increases.



It was the 31st consecutive month of growth for the industry, although July’s activity was weaker than the average seen in both the first and second quarters of 2015.

Markit’s final Eurozone Manufacturing Purchasing Managers’ Index was 52.4, comfortably above the 50 level that separates growth from contraction.

Markit’s purchasing managers’ index – a survey of firms – dropped to a score of 57.4 in July for the UK service sector from 58.5 in June, according to figures released today.

“When looking at the manufacturing and service sectors together, weak inflationary pressures and modest growth tend to support a more accommodative monetary policy environment”.

“Scratching beneath the surface of the headline manufacturing numbers shows that the sector is still reliant on the domestic market to drive overall demand, and on the consumer sector in particular”.

The result follows China’s announcement on Saturday that its official PMI slowed further in July, decelerating to 50.0 from 50.2 in June, as per the National Bureau of Statistics.

Taken together with manufacturing and construction surveys earlier this week, the PMI pointed to economic growth of around 0.6% per quarter, slightly slower than the 0.7% officially reported for the three months to June.

A sub-index showed the services sector grew for a 26th month running, with the rate of expansion unchanged from June at 53.8. It signals the slowest growth rate in three months.

“Yet despite the dip, the service sector continues to act as the main driver of economic growth”.

Brazilian goods producers cut staff levels for the fifth straight month in July, Markit said.

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