Eurozone business activity shows little concern about Brexit

An American tourist stands near the Houses of Parliament the day after the Brexit vote. Photo / Getty
An American tourist stands near the Houses of Parliament the day after the Brexit vote. Photo / Getty

Business activity across the 19-country eurozone grew at a steady but subdued pace in August as the region continued to show little concern about the impact of a British exit from the European Union.

A gauge of activity in the services and manufacturing sectors in the eurozone, the so-called purchasing managers' index, rose slightly to a seven-month high of 53.3 points from 53.2 in July. The index published Tuesday by IHS Markit is on a 100-point scale, with the 50 mark separating contraction from growth in activity.

The result echoes the steady growth seen in July and confirms that businesses in the eurozone aren't overly worried about Britain's decision to leave the EU, the broader 27-country trading bloc that includes the eurozone.

Britain has yet to trigger the clause that will start negotiations on the nation's exit terms. It could take months for the country to invoke that clause and when it does, the actual departure will involve years of negotiations.

The overall figures in the survey suggest the eurozone economy grew at a quarter-on-quarter rate of 0.3 percent in the third quarter, the authors said.

"The eurozone remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by 'Brexit' uncertainty," said Chris Williamson, chief business economist at IHS Markit.

The details of the survey, which is based on the response of executives from about 5,000 companies, nevertheless showed some weak spots. Expectations of future growth weakened. And while services activity was at a three-month high, manufacturing was at a three-month low due to a drop in new orders.

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