The recovery in the eurozone’s dominant services industry faltered slightly in August, highlighting the precariousness of the economy’s return to full health.
The purchasing managers’ index for the services industry, compiled by data company Markit, dipped to 53.1 from 54.2 in July, though it remains well above the crucial 50 level that marks an expansion in activity.
The composite PMI, which combines readings for services and manufacturing, fell to 52.8 from 53.8, weighed down by stuttering growth in the region’s factories.
Both the services and composite PMIs were slightly lower than flash estimates from late last month.
Chris Williamson, chief economist at Markit, said the figures would heighten pressure on the European Central Bank to act at Thursday’s monetary policy meeting.
“The eurozone economy is defying expectations of gaining momentum, which will no doubt add to calls for the ECB to embark on full-scale quantitative easing,” Mr Williamson said.
However, Mr Williamson added that sub indices for individual countries would encourage the ECB president Mario Draghi to strengthen his calls for economic reform. In Spain, which has undergone a major structural revamp, companies saw activity rise at its fastest pace since December 2006, with its PMI rising from 56.2 to 58.1.
Readings for economies such as France and Italy, which the ECB has urged to pursue a stronger reform agenda, were poor.
“The PMI data add to the view that, in the absence of governments taking tough measures to boost competitiveness and productivity, economic performance will remain disappointing even with further ECB action,” Mr Williamson said.
The reading for France, the eurozone’s second-largest economy, remained marginally in positive territory at 50.3, down only slightly from the July reading of 50.4. But the French figure was significantly lower than the flash estimate of 51.1, underlining the difficulties facing President François Hollande’s government in spurring growth and meeting budget targets set by Brussels.
“This absence of economic recovery is a challenge for the budgetary policy, not only this year, but also in the future,” said Dominique Barbet, economist at BNP Paribas. “This also makes structural reforms more difficult to implement, in a political environment which is already very complicated.”
In Italy, the level of business activity dropped slightly, with the PMI reading falling from an expansionary level of 52.8 in July to 49.8. It was the first reading below 50 since March, highlighting the weakness in an economy which in the second quarter fell into its third recession since the crisis began.