Euro area’s service sector performance rebounds in June, PMI index rises to 55.2

Euro area’s service sector performance rebounded at the end of the second quarter. Rates of growth in business activity, new orders and employment accelerated. The final IHS Markit Eurozone PMI Services Business Activity Index recorded a four-month high of 55.2 in June, up from May’s 16-month low of 53.8. The index has hinted at growth in each of the past 59 months. But the average reading over the second quarter as a whole was down from the opening quarter and the worst outcome in one-and-a-half years.

Output growth bolstered throughout the ‘big-three’ euro area service economies in June. Paces of growth reached four-month highs in Germany and Italy, and a two-month high in France. Ireland saw the most rapid rise of all the nations covered, while third-placed Spain was the only one to see a slowdown in growth.

Euro area services new business also rose at the most rapid rate for four months in June, with rates of growth accelerating in all of the nations covered bar Spain. This was enough to keep pressure on capacity, leading to a rise in backlogs of work for the 25th consecutive month. Job creation accelerated to a two-month high in response, with sharper rises recorded in Germany, Ireland and France.

Growth of output, new orders and backlogs had a mildly positive effect on business sentiment, which rebounded a bit for the first time in four months in June. However, the overall extent of business optimism was still the second-softest recorded in the past 10 months.

Price pressures rose at the end of the second quarter. Input price inflation continued to be solid and rose to an 86-month high. Firms recorded higher fuel and staff costs. Part of the rise in input prices was passed on in the form of increased output charges, which rose to one of the greatest degrees in the last decade.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 21.2387, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -100.402. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex