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Euro area, UK business activity move to growth territory in July

Euro area, UK business activity move to growth territory in July

The final composite purchasing managers’ index for July released on Wednesday showed that the euro area may be emerging from recession.

The euro zone composite PMI for July moved to the growth region, as it registered 54.9, compared to the previous reading of 48.5. That was higher than both preliminary and predicted readings of 54.8.

The services sector posted its highest reading in two years at 54.7 last month, up from 48.3 in June.

“The renewed expansion of the service sector bodes well for the economy to rebound in the third quarter after the unprecedented slump seen in the second quarter,” said Chris Williamson, chief business economist at IHS Markit.

However, Williamson warned that the sustainability of improvement in private sector activities would depend on the new coronavirus infections, and the ability of coming up with a safe vaccine.

In the U.K., the composite PMI climbed to 57.0 from 47.7 in June, as the services gauge recovered to 56.5 from 47.1.

Business activity during July posted the strongest growth rate the in five years, but employment was a weak point, Markit said.

As of 09:40 GMT, the euro traded higher versus the British pound at 0.9038, extending its advance for a second straight session.

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