PARIS--The Eurozone economy kept up a solid pace in August with expansions in both manufacturing and services, although the second largest economy France continues to lag behind, according to purchasing manager surveys released Friday.
The figures indicate that the eurozone economy is on track to grow 0.4% in the third quarter from the second, marking a slight acceleration from 0.3%, data firm Markit said. Companies in both services and manufacturing have reported increased levels of new work, which is fueling job creation.
"The flash PMI suggests that the eurozone is still experiencing one of its best periods of economic growth and job creation during the past four years," said Rob Dobson, senior economist at Markit.
Markit, which surveys more than 5,000 businesses in the Eurozone, said its composite purchasing managers index--a measure of activity in the manufacturing and services sector--rose to 54.1 in August from 53.9 in July.
A reading below 50.0 indicates activity is declining, while a reading above that level indicates it is increasing. In services, the PMI rose to 54.3 from 54 in July and in manufacturing to 53.8 from 53.6.
After weaker than expected growth in the second quarter, the data allay some concerns that the eurozone economy is immune to boosts from a sharp drop in oil prices and sweeping monetary stimulus. As the European Central Bank buys EUR60 billion of assets a month, the euro has weakened, which supports exporters, while oil prices dropped to six-year lows earlier this week, cutting costs for manufacturers.
The Eurozone data compare favorably with China, where the August PMI fell to its lowest level since 2009.
"The Eurozone figures provided some welcome stability," said BNP Paribas economist Dominic Bryant.
Still, the data underscore the divergence between the two largest economies in the Eurozone: Germany and France.
In Germany, the largest Eurozone economy, private sector output accelerated and companies hired more staff as manufacturers reported the sharpest rise in output for five months. In France, the manufacturing PMI dipped further into contractionary territory--falling to 48.6 in August from 49.6 in July--and the data pointed to firms cutting jobs.
Data last week showed the French economy failed to grow at all in the second quarter. Unemployment in France has been stuck above 10% for over two years and the most recent figures showed a record high number of job seekers in June.
"Output growth in France's private sector economy cooled to a four-month low in August, suggesting that third-quarter GDP may disappoint again following stagnation in second quarter," said Markit economist Jack Kennedy.
