Euro­zone ‘strong’ de­spite Brexit

Financial Mirror (Cyprus) - - FRONT PAGE -

Euro­zone eco­nomic ac­tiv­ity edged higher in Au­gust with few signs that Brexit-linked dan­gers were yet hurt­ing the Euro­pean econ­omy, a closely watched sur­vey showed Tues­day, ac­cord­ing to the EU news and pol­icy por­tal EurAc­tiv.

Mean­while, Bri­tain’s sec­ond largest house­builder Per­sim­mon said its reser­va­tion rate had risen an an­nual 17% since the start of July, shrug­ging off the im­pact of the Brexit vote, which some fel­low builders have warned could slow the prop­erty mar­ket.

Data mon­i­tor­ing com­pany Markit said the euro­zone econ­omy main­tained its re­silience de­spite Bri­tain’s shock vote to leave the EU, with a strong show­ing from France as well as pow­er­house Ger­many.

Markit said the pre­lim­i­nary Au­gust read­ing for its Com­pos­ite Pur­chas­ing Man­agers In­dex (PMI) for the euro­zone rose to a seven-month-high of 53.3 points, up from 53.2 in July.

The PMI mea­sures com­pa­nies’ readi­ness to spend on their busi­ness and so gives a good idea of how the un­der­ly­ing econ­omy is per­form­ing be­fore of­fi­cial statis­tics are com­piled and re­leased.

Any read­ing above 50 points in­di­cates the econ­omy is ex­pand­ing.

Markit chief econ­o­mist Chris Wil­liamson said the euro­zone econ­omy “re­mains on a steady growth path in the third quar­ter, with no signs of the re­cov­ery be­ing de­railed by Brexit un­cer­tainty.”

Wil­liamson said the bet­ter-than-ex­pected July fig­ures sug­gested the euro­zone econ­omy was grow­ing at “1.2% per­cent (over 12 months), which is sim­i­lar to that seen on av­er­age over the first half of the year.”

The IMF said last month that euro­zone growth this year would hit a stronger-than-ex­pected 1.6%, in­stead of the pre­vi­ously fore­cast 1.5%.

The fund warned how­ever that growth in the cur­rency bloc would drop to 1.4% next year as the Brexit ef­fects kicked in.

Howard Archer of IHS Insight said the “rea­son­able” PMI data “sug­gest the Brexit vote so markedly ham­pered eco­nomic ac­tiv­ity.”

The pre­lim­i­nary Ger­man com­pos­ite in­dex fell to a still strong 54.4 points, with com­pa­nies book­ing fewer new or­ders than ex­pected.

France’s PMI jumped to 51.6 points, the strug­gling econ­omy’s sharpest rise in ten months.

House­builder Per­sim­mon, which posted a 29% in­crease in first-half pre­tax profit to EUR 409.8 mil­lion. said there was an in­crease in the num­ber of peo­ple pay­ing a fee to take a Bri­tish prop­erty off the mar­ket.

While the re­sult of the EU ref­er­en­dum has cre­ated in­creased eco­nomic un­cer­tainty, cus­tomer in­ter­est since then has been ro­bust with visi­tor num­bers to our sites around 20% ahead year on year,” Chief Ex­ec­u­tive Jeff Fair­burn said.

“Our pri­vate sale reser­va­tion rate since 1 July cur­rently 17% ahead of the same pe­riod last year.”

Bri­tish casino op­er­a­tor Rank Group Plc said on Tues­day Bri­tain’s de­ci­sion to leave the Euro­pean Union would have lit­tle or no di­rect im­pact on its per­for­mance, days af­ter it dropped its joint bid to buy bookie Wil­liam Hill Plc.

Rank, the op­er­a­tor of Grosvenor casi­nos and Mecca bingo hall, said it was mainly a UK-fo­cused busi­ness with lim­ited ex­po­sure to non-ster­ling earn­ings. How­ever, the com­pany said any im­pact of Brexit could be driven by lower UK growth rates or loss of con­sumer con­fi­dence and spend­ing power.

The com­pany said trad­ing in the seven weeks to 15 Au­gust had been pos­i­tive and in line with man­age­ment ex­pec­ta­tions.

Rank and on­line gam­ing firm 888 Hold­ings Plc aban­doned their ef­forts to snap up Wil­liam Hill via a cash-and-stock deal to cre­ate Bri­tain’s largest mul­ti­chan­nel gam­bling op­er­a­tor by rev­enue.

But Wil­liam Hill did not show any in­ter­est in en­gag­ing with the con­sor­tium and spurned two takeover pro­pos­als.

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