Eurozone services PMI beats forecasts but GDP growth sluggish

The eurozone services sector recorded a better than expected performance in June, according to purchasing managers index (PMI) data from Markit, though a final reading of the composite index indicated the eurozone endured its weakest second quarter of growth since the end of 2014.

June's services PMI reading rose to 52.8, besting the 52.4 from May and also the consensus forecast that this would be repeated for a second month.

The final reading of the Composite PMI June came out at 53.1, up from the flash reading of 52.8 and flat on the previous month.

This indicated that gross domestic product (GDP) of the eurozone will have slowed to 0.3% in the second quarter.

“The eurozone economy failed to gain momentum in June, rounding off a disappointing second quarter," said Markit's chief economist Chris Williamson. "Faster manufacturing growth was countered by a slowdown in the service sector, leaving the overall pace of expansion of business activity unchanged since May."

He added that with few signs of a pickup policymakers will be worried, especially as the uncertainty from the ‘Brexit’ decision appears likely to subdue growth in coming months, with 90% of the service sector replies for June received prior to the UK’s EU referendum result.

Among eurozone countries, France slipped back into decline in June with a services reading of 49.9 and hence composite of 49.6, but Germany's solid growth continued with 53.7 services and 54.4 composite both beating expectations, while upturns gathered pace in both Italy and Spain.