LONDON (Reuters) – Economic activity in the euro zone was boosted in August by the hosting of the Olympic Games in France, but the bloc’s economic difficulties are likely to return to the fore once the Paralympics are over as demand remains weak, a survey showed on Wednesday.
Final results of the HCOB/S&P Global purchasing managers’ survey show that the composite indicator jumped to 51.0 in August, from 50.2 in July and 51.2 given in the first estimate.
This is the sixth consecutive month that it has been in positive territory, since the 50 mark separates growth and contraction in activity.
“The Paris Olympics were rich in victories, and the French services sector is certainly one of them. But the big question is whether this boost is sustainable,” wonders Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The positive vibes from the ongoing Games and Paralympics could continue partly in September, but we expect the slowdown in growth that began in May to likely resume in the coming months.”
Aggregate demand in the currency bloc declined for the third straight month, pointing to weakness ahead. The composite index of new orders fell below the 50-mark to 49.1, though slightly above the 49.0 reading recorded in July.
The services PMI index rose from 51.9 in July to 52.9 in August, compared to a flash estimate of 53.3, offsetting a continued contraction in the manufacturing sector.
But optimism for the year ahead has faded among services companies. The index measuring their expectations fell to 59.1, its lowest level since the start of the year, from 60.4 previously.
(Reporting Jonathan Cable; Claude Chendjou, edited by Kate Entringer)
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