A survey has shown that business activity in the euro zone unexpectedly stabilised at weak levels in August. A plunge in oil prices took the pressure off companies' costs.
The August Flash Eurozone PMI data from RBS/Markit were all better than expected, although they pointed to deterioration in activity and employment.
The services PMI edged down to 48.2 in August from 48.3, the lowest since June 2003 but above the 48 expected by economists. The figure for manufacturing edged up to 47.5 from 47.4, as did the combined figure to 48. A number below 50 signals a decline in activity.
Analysts said the figures may be welcomed by ECB policymakers as they do not show a worsening of the economic slowdown, but do provide clear evidence of inflation rates tapering off as oil prices tumble.
The report showed a sharp slowing in the rate of increase in prices services sector companies charge to their customers, with that index tumbling to a six-month low of 52.2 in August from 54.5 in July. The input prices index also fell sharply, to 62 from 65.2.
The services sector jobs index slipped, but new business stabilised at 47.7 - the lowest level since the run-up to the Iraq war in early 2003. The services business expectations index rose to 51.7 from 49.7.
Euro zone manufacturing showed even clearer signs of stabilising, with the output index up nearly a full point to 47.6 in August from 46.7 in July and the jobs index rising as well as the new export orders index.
