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Business growth slows but not everywhere

Monday, May 23, 2016 - 01:34

Business growth across the euro zone was at a 16-month low in May but, as Sonia Legg reports, after robust showings from Germany and France Monday's surveys suggest it is the smaller member countries which are struggling.

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Germany's on a roll - new surveys show its private sector has accelerated to its fastest rate this year. Fears about the impact of a slowing China on a traditionally export driven country seemingly fading. (SOUNDBITE) (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING: "I think the gears have changed a little, consumption is now a much more important, particularly with record low unemployment, the platform of demand is simply much greater. And now we have also got the fiscal stimulus via the refugee support which is also positive for growth. All that in combination leads to an economy that is more balanced." France also beat expectations. Business activity in the euro zone's second largest economy was back at pre Paris attack levels. But the euro zone as a whole isn't fairing as well. Business growth across the region dipped to a 16-month low in May, suggesting the smaller countries may be struggling. Markit's PMI also pointed to quarterly growth of 0.3 per cent - that's down from the first quarter's half a percent. (SOUNDBITE) (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING: "We still believe that Europe as a whole, but also the euro zone is in a cyclical recovery, after 6 or 7 years of belt tightening on the back of that financial crisis. The banks in particular have shrunk their balance sheets, raised their capital ratios, more and more banks are now willing and able to lend." No alarm bells yet then. But the ECB is still battling to get inflation up, despite plenty of stimulus. And it may be concerned about the index that measures the prices businesses charge - at 49 it was slightly up but still below the key 50 mark.

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Business growth slows but not everywhere

Monday, May 23, 2016 - 01:34