Eurozone Expansion Continues - But at Slower Rate

04 August 2006

The monthly Eurozone Composite Output Index, conducted for the Royal Bank of Scotland by NTC Research, signalled an expansion of combined manufacturing and service sector output for the thirty-sixth consecutive month in July.

The report covers the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area. It features original survey data collected from a representative panel of over 5,000 manufacturing and service companies across the Eurozone.

These are the key findings for July 2006:

    Having risen continually over the ten months to June to a six-year high of 60.4, the Index slipped to 58.5, signalling an easing in the rate of growth to a four-month low. However, the latest reading points to a rate of expansion in line with the average seen over the first half of 2006.

    The moderation in growth of output reflects a reduction in the rate of increase of incoming new business during July, which rose at the weakest pace for four months. However, the rate of new order inflows overall remained buoyant and new business has now increased continually over the last three years.

    In the combined manufacturing and service sectors employment rose for the eleventh successive month as companies boosted capacity in response to the sustained growth of demand. Services again reported stronger job creation than manufacturing, as has been the case over the last two years, although rates of increase slowed in both sectors.

    Average prices
    The prices of goods and services rose for the eleventh consecutive month, with the rate of inflation remaining almost unchanged on the survey record high seen in June. Average input prices rose at the fastest rate since the oil-price induced spike of October 2004, driven up by higher energy and metals prices, as well as price hikes for a growing variety of other inputs and growing wage pressures.
For further information on the report click here.

Data sourced from NTC Research; additional content by WARC staff