LONDON: Euro zone business growth was at its slowest since the start of 2015 this month as a stronger performance in the two big economies of Germany and France was offset by weakness in smaller countries, a survey showed on Friday.
While the survey result was not as weak as predicted in a Reuters poll, the slight loss of momentum may be of concern to policymakers at the European Central Bank who have been trying to stimulate faster growth.
Markit's flash composite Purchasing Managers' Index (PMI), seen as a good growth indicator, dipped to 52.9 from June's 53.1, the lowest reading since January 2015. However, a Reuters poll had predicted a steeper fall to 52.5.
A reading above 50 indicates growth.
"Headline PMIs picked up for Germany and France but the overall one fell and the rest of the region combined saw the weakest rise in activity since December 2012," said Chris Williamson, chief economist at Markit.
"There is a strong indication that Italy and Spain saw a deterioration in growth rates."
After keeping policy unchanged, ECB President Mario Draghi said on Thursday the central bank is prepared to take more action to lift inflation and economic growth if necessary.
Inflation was just 0.1 percent in June, nowhere near the ECB's target ceiling, but the composite output price PMI rose to 49.6 from 49.1, its highest reading in nine months.
"The decline in prices was only marginal, deflationary pressures are easing. This won't overly worry the ECB," Williamson said.
"Given what else has happened in the past month, to get a PMI like this is something that Draghi and the Governing Council will be reasonably comfortable with."
A truck attack on holiday crowds in France last week killed 84 people and hurt hundreds, the third deadly assault in the country in 18 months for which Islamist militants have claimed responsibility.
Further muddying the waters, Britons voted on June 23 to leave the European Union, a surprise outcome that sent shockwaves through global financial markets and means the British economy will probably slide back into recession in the coming year.
A corresponding survey for Britain, due at 0830 GMT and one of the first major indicators to give an idea of how Britain is faring after the referendum, is expected to show manufacturing growth stagnated while services activity contracted. A PMI covering the euro zone's dominant service industry beat expectations for a fall to 52.3 from 52.8 by only nudging down to 52.7, still an 18-month low.
The factory PMI suffered a sharper fall, coming in at 51.9 versus June's 52.8, close to expectations for 52.0. An index measuring output, which feeds into the composite PMI, fell to 53.6 from 53.9.
Giving a mixed outlook for next month, services firms increased headcount at the fastest rate since early 2008 but new order growth for manufactured goods slowed dramatically.
Still, if maintained at this level, the composite PMI points to third-quarter economic growth of 0.3 percent, Markit said, in-line with a Reuters poll published on Wednesday but a sharp slowdown from the 0.6 percent growth seen at the start of the year.
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