Brexit is having almost no impact on the European economy

The eurozone’s is shaking off fears about the impact of Britain’s vote to leave the European Union, and has seen “little overall contagion” from the vote, according to the latest PMI data released by Markit on Wednesday morning.

Markit’s composite PMI for the eurozone was a solid beat on the flash reading, released on July 22, which showed a score of 52.9. The final July figure, released on Wednesday morning, confirmed a reading of 53.2. As well as beating the flash estimate, that was also marginally higher than June’s final 53.1 reading.

The purchasing managers index (PMI) figures from Markit are given as a number between 0 and 100.

Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the better.

The numbers are Markit’s final PMIs for the eurozone in July, and we now have a full picture of just how little participants in the European economy seem to have been effected by the Brexit vote. Here’s the full scoreboard of PMIs:

  • Services PMI — 52.9, up from 52.8 in June and ahead of the 52.7 flash estimate.
  • Manufacturing PMI — 52, down from 52.8 in June, but up from the 51.9 flash estimate.
  • Composite PMI — 53.2, up from June’s 53.1 reading, and higher than the 52.9 flash.

Markit also provided breakout readings for the eurozone’s four largest economies, which also showed a surprising lack of impact from the Brexit vote. Take a look at the numbers provided by Markit:

  • Spain services — 54.1, previous 55
  • Italy services — 52, previous 51
  • France services — 50.5, previous 50.3
  • France composite — 50.1, previous 50
  • Germany services — 54.4, previous 54.6
  • Germany composite — 55.3, previous 55.3

Here’s the single currency area-wide chart:

Speaking about the results, Markit’s chief economist Chris Williamson said (emphasis ours):

“A welcome uptick in the final PMI numbers presents a slightly better picture than the slowing signalled by the earlier flash reading, and is especially encouraging as it suggests the region saw little overall contagion from the UK’s ‘Brexit’ vote.”

Williamson also urged caution, noting that while the overall numbers were something of an improvement, the eurozone’s expected growth is hardly stellar:

“However, the survey is still indicating only a modest 0.3% quarterly rate of economic growth at the start of the third quarter. Such a meagre pace of expansion will inevitably fuel speculation about what the ECB could and should do to boost growth, and when.

“The upturn is being led by surging growth in Germany, where a 0.5% pace of expansion is being signalled. However, France continued to stagnate, acting as a significant drag on the region. Growth has also slowed in Spain and Italy, in both cases indicating that political uncertainty is hurting businesses.”

At 9:30 a.m. BST (4:30 a.m. ET) Markit will release the first set of confirmed UK composite data since the vote to leave the European Union, which could confirm the disastrous flash PMI’s released in mid-July.

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