2016.08.2307:31:00UTC+00Eurozone Private Sector Expands Most In 7 Months

Eurozone private sector expanded at the fastest pace in seven months in August, mirroring no major signs of "Brexit" impact in the region.

The composite output index rose unexpectedly to 53.3 in August from 53.2 in July, flash results from Markit's Purchasing Managers' survey showed Tuesday.

The reading was forecast to drop slightly to 53.1. A score above 50 indicates expansion.

The flash services Purchasing Managers' Index climbed to 53.1 from 52.9 a month ago. The score was expected to drop to 52.8.

On the other hand, the manufacturing PMI fell to 51.8, while it was forecast to remain unchanged at 52.

"The survey data are consistent with the region's GDP growing at a quarterly rate of 0.3 percent in the third quarter, or 1.2 percent annualized, which is similar to that seen on average over the first half of the year," Chris Williamson, chief business economist, at IHS Markit said.

Stephen Brown at Capital Economics, said the PMI data suggests that while the region has so far weathered the UK's Brexit vote, economic conditions remain fairly subdued.

The economist expects the European Central Bank to announce a rise in the pace of asset purchases to EUR 90 billion per month and extend the programme by six months to September 2017.

Output growth accelerated marginally in both manufacturing and services. Greater variation was seen in terms of order books. Manufacturing saw a slowing in demand, whereas inflows of new business in the service sector increased at the fastest rate for four months.

Employment increased again in August but the rate of increase slowed to a three-month low, hit by weaker hiring trends in both manufacturing and services.

Inflationary pressures remained muted. Although input costs rose for the fifth month in a row, the rise was the smallest since April. Meanwhile, average selling prices fell again, dropping at a slightly greater rate than July.

Germany's private sector growth eased in August largely due to a slowdown in services. Meanwhile, the French private sector expanded at the fastest pace in ten months.

The flash composite output index dropped to 54.4 from 55.3 in July.

In the service sector, activity rose at the smallest degree in 15 months. The corresponding PMI declined more-than-expected to 53.3 in August from 54.4 in July. The score was expected to fall marginally to 54.3.

The factory PMI also declined in August to a 3-month low of 53.6 from 53.8 a month ago. The expected score was 53.6.

After the stagnation seen in the second quarter, France's composite output index rose to 51.6 in August from 50.1 in July.

French service providers reported a second successive monthly rise in business activity. The PMI climbed to a 10-month high of 52 in August from 50.5 in July. The score was expected to remain unchanged at 50.5.

Meanwhile, the manufacturing sector continued to contract in August. The factory PMI came in at 48.5 versus 48.6 in July, and also below the expected score of 48.8.

The rest of the Eurozone excluding Germany and France registered further robust overall growth in August, data showed.