Eurozone Service Industries Experience Short Term Boost

04 July 2002

Service businesses in the Eurozone – the eight nations comprising the euro currency area (Austria, France, Germany, Greece, Ireland, Italy, The Netherlands and Spain) – saw business activity increase during June, according to the Reuters Eurozone Service Sector Business Activity Index from NTC Research.

The index registered a gain from 52.1 in May to 52.9 in June – a modest increase but moving upward for the sixth consecutive month (figures above or below the ‘no change’ mark of 50.0 respectively indicate an increase or decrease in activity). But the pace of gain remained below that of March and April.

France reported the strongest growth of activity, followed by Ireland. The weakest performance was again seen in Germany, although a marginal increase in German activity in June represented an improvement from contraction in May.

The key findings for June are …

Composite Output Index
The Composite Output Index rose from 52.6 in May to 53.1 in June, signalling an increase in output for the fifth consecutive month. Although the rate of growth improved modestly, it remained significantly weaker than seen throughout 2000, therefore suggesting only a subdued recovery from the decline seen during the second half of last year.

Composite New Business Index
The Composite New Business Index rose very marginally, up from 52.4 in May to 52.5 in June to register an increase in new work for the fifth month in a row and a slight improvement in the rate of growth. The pace of growth failed to recover to the fourteen-month high recorded in April, however, and remained only modest – especially compared to that recorded between mid-1999 and late-2000.

Very weak growth of employment in the service sector was offset by the thirteenth consecutive monthly drop in manufacturing employment.

Input Costs
Meanwhile, average input costs rose for the sixth month in a row and a moderate rise in the rate of cost inflation was recorded, pushing the rate of inflation to its highest since February 2001.

Data sourced from: NTC Research; additional content by WARC staff