Euro-Area Economy Shakes Off Greek Shackles on Draghi Stimulus

The euro-area economy strengthened last month, with a business index rising more than initially reported to the highest level in four years.

Markit Economics said its composite Purchasing Managers Index increased to 54.2 from 53.6. That’s above the flash number of 54.1 and marks the highest reading since May 2011. The index suggests the economy grew 0.4 percent in the quarter through June, matching the pace of the first three months of the year.

Helped by Germany, its largest economy, as well as signs of renewal in Italy and France, the euro-area recovery is so far showing resilience against the escalating debt crisis in Greece. That’s partly due to European Central Bank President Mario Draghi’s latest stimulus, a 1.1 trillion-euro ($1.2 billion) bond-buying program that’s been running for the past four months.

The index suggests “the turmoil has so far had little discernible impact on the real economy,” Chris Williamson, chief economist at Markit in London, said on Friday. “The combination of ECB stimulus and low inflation appears to be boosting spending among consumers and businesses, offsetting ‘Grexit’ anxiety.”

Markit said its services index rose to 54.4 in June from 53.8 in May. That matched the initial estimate and was above the 50 mark that divides expansion from contraction. A manufacturing gauge published earlier in the week also increased.

The composite report showed that employment continued to rise in June, capping the best quarter for jobs in four years. Nevertheless, a forward-looking measure of demand fell to a four-month low of 53.3 from 53.5.

“The survey is hinting that some risk aversion is creeping in,” Williamson said. That “could hit growth in coming months if the Greek crisis is not resolved soon,” he said.

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