The pace of recovery in the euro zone's dominant service sector barely changed in August from July, according to a business survey that showed growth of the bloc's wider private sector slowed slightly last month.
The Markit Eurozone Services Purchasing Managers' Index, which measures changes in activity at thousands of companies ranging from hotels to banks, showed order books growing and companies hiring staff at a marginally faster rate in August.
The main index for activity in the service sector, which accounts for roughly two-thirds of the euro zone economy, rose to 55.9 in August from 55.8 in July, slightly higher than an earlier flash estimate of 55.6.
Marking its twelfth month above the 50 mark that divides growth from contraction, recent surveys suggest the service sector's expansion has reached a plateau. The headline figure has wavered in a range between 55.5 and 56.2 over the last five months.
"The final PMI reading suggests that the service sector recovery held its ground in August, with growth of activity so far in the third quarter in line with that seen on average in the second quarter," said Rob Dobson of survey compiler Markit.
The 16-country euro zone economy expanded 1 per cent in the second quarter over the first, its fastest pace in more than three years, although the strong reading was really a reflection of German and French resurgence.
The latest batch of services PMIs from the euro zone's individual countries did little to dispel fears of a two-speed recovery in Europe.
German service sector activity picked up in August and the French survey showed rocketing growth in fresh orders, helping the overall euro zone PMI new business index rise to 54.9 in August from July's 53.1.
Conversely, the euro zone's fourth largest economy Spain saw an unexpected decline in service sector activity last month, with its PMI index dipping below 50 after five months of positive momentum.
"The main concern remains the continued dependence of the recovery on France and Germany, with rates of activity expansion for the big two still far-and-away above those seen on average elsewhere," said Dobson.
The euro zone composite PMI index, which combines the surveys from both the services and the manufacturing sectors, fell slightly in August to 56.2 from 56.7 the previous month, although a little higher than the flash estimate of 56.1.
The composite employment index rose to 51.7 from 51.4 in July, extending a recent trend of jobs growth to four months.
European Union statistics on Tuesday showed the rate of unemployment across the euro zone held steady at 10 per cent in August. While hiring increased in Germany, joblessness grew in Belgium, Spain and Ireland.
"Further job creation in August alongside faster growth of new business and improving service sector confidence ... bode well for the coming months," said Dobson.
Yesterday, European Central Bank president Jean-Claude Trichet warned of uncertainties about growth prospects in some advanced economies and the "emergence of renewed tensions in financial markets" as downside risks to the growth outlook.
Reuters