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Survey indicates eurozone is growing slowly
Economy » After a weak no-growth quarter, recent months slow sluggish bounceback.
First Published Aug 21 2014 11:33 am • Last Updated Aug 21 2014 11:33 am

Frankfurt, Germany • A survey of business activity shows the economy of the 18-country eurozone grew at only a slow pace in August, a sign it remains sluggish after a disappointing second quarter in which it did not expand at all.

The purchasing managers’ index published by Markit Economics fell to 52.8 points from 53.8 in July. A reading over 50 indicates the economy is expanding.

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The signs of mild growth follow an official growth figure of zero for the second quarter, which ended June 30. The flat figure raised fears that a weak recovery was stalling after four quarters of mediocre growth. Unemployment remains high and low inflation of only 0.4 percent has raised fears the eurozone may slip into deflation, a downward spiral of falling prices that kills growth.

Markit economist Rob Dotson said Thursday the eurozone "looks ready to bounce back" following the second quarter but that third-quarter growth would be only around 0.3-0.4 percent.

The survey showed activity in France, the eurozone’s No. 2 economy, stabilized after three months of declines.

Recent survey data, however, have contrasted with hard figures for growth and industrial production, which painted a more downbeat picture.

Factors holding back the economy include lack of pro-growth reforms in France and Italy, tight government budgets, and fear that the conflict in eastern Ukraine may escalate. Government forces are fighting heavily armed pro-Russian separatists, stoking fears of a Russian invasion.




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