European Manufacturing, Services Growth Slows for a Second Month in June

Growth in Europe’s services and manufacturing industries slowed for a second month in June, adding to indications the recovery is losing momentum.

A composite index based on a survey of euro-area purchasing managers in both industries fell to 56 from 56.4 in May, London- based Markit Economics said today. That’s in line with an initial estimate published on June 23. A reading above 50 indicates expansion.

The European economy is showing signs of weakening after Greece’s fiscal crisis undermined investor confidence and forced governments to step up austerity measures. In Germany, the region’s largest economy, investor confidence plunged in June and U.K. services growth also weakened in June. Volkswagen AG, Europe’s largest carmaker, is among companies that have relied on faster-growing markets including China to boost sales.

“The indicator will continue to weaken over the coming months,” said Christoph Weil, a senior economist at Commerzbank AG in Frankfurt. “It’s a bit of normalization in growth. The second half will definitely be weaker than the first, but we’re still far from a double-dip recession.”

An index of services in the euro region fell to 55.5 from 56.2, today’s report showed. A gauge of euro-area manufacturing declined to 55.6 from 55.8 in the previous month, Markit said on July 1.

The euro was little changed against the dollar after the report, trading at $1.2547 at 10:45 a.m. in Frankfurt. The single currency has shed 12 percent against the dollar this year on concern that a debt crisis will spread across the region.

To contact the reporters on this story: Simone Meier in Zurich at smeier@bloomberg.net

July 5 (Bloomberg) -- Klaus Baader, chief European economist at Societe Generale SA, speaks about the the impact of fiscal tightening measures on euro-region economies. He talks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)