The euro zone services sector grew at a slightly faster pace last month than initially thought, a survey showed today, further supporting indications that the region's recovery from a deep recession has momentum.
The upbeat report suggested that the financial crisis that has gripped Greece and has stoked speculation about the financial health of other smaller euro zone countries so far has not dealt a major blow to overall economic activity.
The report also pointed to only minimal economic impact from the plumes of volcanic ash from an erupting Icelandic volcano that paralysed much of European airspace for several days during the month.
Markit said it revised up its final services sector purchasing manager's index (PMI) to 55.6 from 55.5, which marked a sharp rise from 54.1 in March and showed the fastest rate of services growth since October 2007.
Growth in the 16-member euro area's biggest economy, Germany, accelerated, and French services growth bolted higher after a setback earlier in the year. Italian services growth slowed slightly from March as did laggard Spain.
The composite PMI, which provides a broader read of economic activity in a survey panel of 4,500 companies that also includes manufacturers, was left unrevised at 57.3, well above the 50.0 mark that splits growth and contraction.
If sustained at that level, it would point to robust economic growth in the second quarter, Markit said.
"The final data confirm the message from the earlier flash estimate that euro area GDP could exceed current consensus forecasts in Q2, expanding by as much as 0.6 per cent," said Markit's chief economist, Chris Williamson.
But he said Greece - which represents a tiny share of overall euro zone GDP - remained a concern, with firms reporting that export sales are being lost as an increased rate.
The report also suggested that downward price pressures in the euro zone were abating. The output prices index for the services sector was revised up to 48.3 from 47.8.
The composite prices charged index was also revised up to 50.2 from 49.7, although driven primarily by manufacturing. That was the first reading showing output price inflation since October 2008.
Meanwhile German service sector activity grew at its fastest pace in almost three years in April and its companies' outlook grew even brighter, a separate survey showed today.
Final data from the Markit purchasing managers' index for the services sector showed a ninth straight month of growth, with the headline index rising to 55.2 from 54.9 in March.
The final reading was slightly higher than a flash estimate of 55.0 made last month and added to evidence that recovery in Europe's largest economy is gaining strength after treading water over the winter.
Reuters