Eurozone business growth lost a little momentum last month despite companies cutting prices again, but they also took on workers at the fastest rate in four years, a survey showed yesterday.
The deceleration in growth will be disappointing for the European Central Bank, coming just a few months after it embarked on a 1 trillion euro (US$1.112 trillion) quantitative easing program to try to drive growth and fuel inflation.
Markit’s final composite Purchasing Managers’ Index, seen as a good guide to growth, stood at 53.6 last month, above an earlier flash reading of 53.4, but below April’s 53.9.
A reading above 50 implies growth.
“The eurozone recovery lost some of the wind from its sails in May, with growth of output and new orders both slowing to three-month lows,” Markit head economist Chris Williamson said.
Firms have been cutting prices since April 2012, but did so last month at the weakest rate in nearly a year. The output price sub-index rose to 49.5 from April’s 49.2.
The eurozone returned to inflation last month with a higher-than-expected increase in consumer prices after five months of falls and stagnation, due to rising food costs and the waning impact of cheap energy.
The EU’s statistics office Eurostat on Tuesday said that consumer prices in the 19 countries sharing the euro rose 0.3 percent year-on-year last month after a flat reading in April, beating market expectations of a 0.2 percent increase.
Excluding volatile energy prices, which were 5 percent lower last month than 12 months earlier, consumer prices rose 1 percent. Excluding energy and unprocessed food — or core inflation — prices were up 0.9 percent, a nine-month high, accelerating from a revised 0.7 percent in April, Eurostat said.
Meanwhile, the final PMI covering the eurozone’s service industry came in at 53.8, beating a flash reading of 53.3, but below April’s 54.1.
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