Eurozone economy enjoyed 'best quarter in over 6 years'

Overall economic activity in the euro zone missed the mark in June, but still managed to register the best quarterly growth in six years, bolstering optimism over the region's economy, preliminary data showed on Friday.

IHS Markit Economics' Composite PMI reading of Eurozone growth fell to 55.7 in June, down from 56.8 in the previous month and the lowest tally since February.

Oil prices meanwhile bobbed higher after a tumultuous week which saw NY crude collapse to a ten-month low.

Any reading above the boom-bust 50 points line indicates the economy is expanding.

A survey by IHS Markit showed private sector activity in the bloc's manufacturing and services sectors remained robust in June as companies continued to hire at a rapid pace to cope with rising backlogs of work.

By sector, the all important services index dropped to 54.7 points in June from 56.3 in May, while manufacturing edged higher, to 58.5 points from 58.3. Manufacturing grew at its steepest pace since 2011, while a gauge for services slipped to a five-month low.

Highlighting a conundrum faced by the European Central Bank that accelerating growth is failing to translate into faster inflation, Markit said average prices charged for goods and services increased at the weakest pace in five months in June. "Despite the June dip, the average expansion in the second quarter has been the strongest for over six years and is historically consistent with GDP growth accelerating from 0.6% in the first quarter to 0.7%". It also eased against the yen to stand flat on the day at 124.16, while against the pound, it was down at 0.8770 pounds.

"After a string of exceptionally strong figures, the composite PMI for the eurozone has come down to earth in June", said UniCredit economist Edoardo Campanella.

  • Zachary Reyes