Euro area service sector activity grows strongly in June, PMI index rises to 53.6

The euro area service sector activity grew strongly in June. The IHS Markit Eurozone PMI Services Business Activity Index rose to 53.6 in the month from May’s 52.9. The index indicated the strongest growth of activity since October 2018. All nations covered by the survey saw a rise in activity compared to the previous month, led by Ireland and Germany. On the contrary, Italy saw just a marginal rise in activity.

Increased overall services activity in the currency bloc was associated with a similar-sized and stronger increase in new business volumes. This resulted in some pressure on capacity, as underlined by the most solid rise in backlogs of work since last November. Jobs were created at a more rapid rate throughout the euro area services economy. The most rapid rise in employment was recorded in Germany, after Ireland. Strong employment gains were seen in Italy and France.

Increasing employment costs continued to be an important driver of overall inflation of operating expenses in the latest survey period. Nevertheless, the net rise in costs was the softest seen by the survey since September 2017. On the contrary, charges rose at a slightly more rapid rate, though still one that stayed well below that of costs. Finally, business confidence dropped to a four-and-a-half year low in June. The latest data showed that German and French service providers were the least confidence of a rise in activity from present levels in 12 months’ time.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Euro was bullish at 99.9999 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -25.06 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex