Business in Europe End Second Quarter Recording Sluggish Growth

Several of the busy euro zone business witnessed an unexpected slowdown by the end of the second quarter of 2017. Some of the markets in the region saw sudden slump in area of growth by services firms. However, with inflation comparatively strong and overall expansion still quite stable, policymakers at the European Central Bank will certainly be able to handle the pressure.

The ECB discontinued with its prejudice for greater rate cuts in a small mover towards stability earlier this month.  After registering 56.8 in April and May that was strongest since April 2011, the IHS Markit’s Flash Composite Purchasing Managers’ Index declined to 55.7 a rating more than 50 is positive. Some of the reports suggested to change in the index, looked at as positive guide to growth, and experts were also caught by surprise by this sudden slump. According to online sources, few were really worried about the unexpected bump. This might be a sigh the growth that was recorded for over the past couple of months have reached a point where it will now start hit some ceiling and firms might now have be a bit more cautious in expanding.  Reportedly, PMI suggested of 0.7 percent second quarter GDP growth, which was higher that was higher than 0.5 percent anticipated by the few reports.

Last quarter, The PMIs was spot on about the expansion rate of 0.6. Economic data reveals a strong rise in the euro zone after the first six months of 2017, and inflation will continue to be steady over the next couple of months. In the last six or seven moths firms have been increasing rates, although at a slower pace as investment pressures reduced. The output rates table dropped from 52.4 to 51.8. Companies functioning in the large scale service verticals performed moderately as projected.

The services PMI dropped from 56.3 to 54.7, even below than some of the pessimistic predictors anticipated in some of the reports. The reason behind this sudden drop is still not clear and expert are still unable to spot any major cause that could have triggered it. Few believe it is a payback for the fast success in recent months. However, there was something to sheer about as the employment index remained stable in June similar to that of May. Only in 2008, the employer index was higher than it currently is.

Sudip Saha

Sudip Saha is one of the leading tech consultants in APAC, having served at key positions in leading IT consulting firms. He has extensively written about the commercial viability and impact of next-generation technologies, most notably AI, IoT, and Big Data. Sudip’s forte lies in offering a nuanced analysis on the key developments in the tech landscape. A reputed thought-leader, his views have been published in leading publications, including CIO, ZD Net, Economic Times, and The Economist