Euro-Area Economy’s Lackluster Growth to Persist, Markit Says

The euro area’s lackluster pace of growth is set to continue as the economy cools from a strong first-quarter performance, according to Markit Economics.

Its gauge of new business growth at manufacturing and services firms fell to a 16-month low in May, meaning output is likely to stay subdued in the coming months. The surveys suggest the 19-nation economy will grow 0.3 percent this quarter, down from 0.5 percent in the three months through March.

The economy “seems unable to move out of low gear,” said Markit Chief Economist Chris Williamson in London. “Such a lackluster performance in the second quarter points to an ongoing lack of growth momentum, which in turn raises the prospect of policy makers seeking new ways to stimulate growth.”

European Central Bank President Mario Draghi said Thursday that policy makers’ latest stimulus has yet to take full effect and that they are focusing on implementation. The ECB is committed to buying 80 billion euros ($89 billion) of assets a month until at least March, and corporate-bond purchases start next week.

Markit said its composite Purchasing Managers Index was at 53.1 in May -- above the 50 level that divides expansion from contraction and higher than an initial estimate of 52.9. A measure of job creation hit a four-month high.

Across the region, growth picked up in Germany and France, while Italy showed a slowing to near stagnation.

Markit’s services index rose to 53.3, a three-month high and a notch above its flash reading of 53.1.

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