Europe is shrugging off the shock of Brexit
Markit's flash PMIs for July largely beat the forecasts of economists, and fought against the headwinds created by Brexit, but remained subdued in the long term, hitting 18-month lows in both the services and composite readings. Manufacturing was at a two-month low.
Here is the scoreboard of Markit's releases:
- Eurozone Services PMI - 52.7, down from 52.8 in June, but up from the 52.5 reading expected.
- Eurozone Manufacturing PMI - 51.9, off from June's 52.8 final reading, and just below the 52 reading forecast.
- Eurozone Composite PMI - 52.9, a big beat on the 52.5 forecast, but down from 53.1 in June.
The purchasing managers index (PMI) figures from Markit are given as a number between 0 and 100.
Anything above 50 signals growth, while anything below means a contraction in activity - so the higher the better.
The figures are a flash reading, meaning that they could easily be revised upwards or downwards when final readings come in at the end of the month. However, given that the readings are some of the first hard economic data to be released since Britain voted to leave the EU, they're still pretty important.
Speaking about the data, Markit's chief economist, Chris Williamson said (emphasis ours):
"The eurozone economy showed surprising resilience in the face of the UK's vote to leave the EU and another terrorist attack in France.
"The overall rate of economic growth is largely unchanged, suggesting GDP is growing at a sluggish but reasonably steady annual rate of around 1.5%.
"It's especially encouraging to see employment growth continuing to improve, with firms' appetite to hire seemingly so far unaffected by the uncertainty caused by the Brexit vote, especially in Germany."
And here is the chart from Markit:
Markit
It was not just the eurozone as a whole to get readings from Markit on Friday, and the two biggest economies in the single currency area, Germany and France, received breakout readings. Here is how things looked in both countries:
- Germany Services - 54.6, a beat on forecasts of 53.2, and above June's 53.7 reading.
- Germany Manufacturing - 53.7, below June's 54.5 reading, but a beat on expectations of a 53.5 reading.
- Germany Composite - 55.3, compared with estimates of 53.7, and a reading of 54.4 last month.
- France Services - 50.3, a two-month high, out of contraction and up from June's 49.9 reading.
- France Manufacturing - A four-month high of 48.6, up from 48.3 in June, but still shrinking.
- France Composite - 50, a two-month high and up from 49.6.
At 9:30 a.m. BST (4:30 a.m. ET) Markit's flash PMI reading for the UK will be released, and could provide a first key indicator of how big, if any, the economic shock to Britain has been since Brexit.