Growth Europe’s services and manufacturing industries decelerated

Growth Europe’s services and manufacturing industries decelerated

07-05-2010 14:43

Growth in European services and manufacturing industries lost pace last month. It was the second month of growth deceleration. This second slowdown raises speculations that the recovery is weakening. A combined indicator based on an inquiry of eurozone purchasing managers in both industries dropped from 56.4 in May to 56 in June. Markit Economics revealed these figures today. The reading approaches last month’s forecast. Any figure above 50 means growth.

Budget problems

Europe’s economic growth seems to decelerate, which is caused by Greece’s budget problems. The situation in Greece affected investors’ confidence and governments had to invent severe measures. Confidence among German investors decreased last month, while growth of the British service sector decelerated last month. Volkswagen AG is one of those firms that focus on emerging markets like the Chinese market to increase sales.

Deceleration growth

Christoph Weil, a senior economist at Commerzbank AG, commented: “The index will continue to fall in the next months. This slowdown can be considered as a normalization in growth. The last two quarters of this year will surely show less growth than the first two quarters. Nevertheless, a double-dip recession is still far away.”

Services and manufacturing

The report demonstrated that an indicator of services in the euro-area dropped from 56.2 to 55.5. An index of eurozone manufacturing fell from 55.8 to 55.6 in June, according to Markit figures.

Euro

The report didn’t affect Europe’s Common Currency, which traded at $1.2547 at 10:45 a.m. The Euro has dropped 12% versus the Greenback in 2010 due to fears that more eurozone countries face budget problems.