Surprisingly strong growth in France supported stable eurozone private business activity during August but factories could face a tougher September as new order growth stumbled, surveys showed yesterday. Muddying the outlook for the coming months is the United Kingdom's vote in late June to leave the European Union, although so far the economic repercussions seem to have been confined to Britain, not its main trading partner. "August's slight rise in the euro zone Composite Purchasing Managers' Index suggests that, despite shrugging off the UK's Brexit vote, economic conditions remain fairly subdued," said Stephen Brown at Capital Economics.
France's private sector shrugged off its neighbor's vote and accelerated to levels last seen just before the militant attacks in Paris in November, as an upturn in the service sector offset continued weakness in manufacturing. Those attacks, and the recent one in Nice in July, hit the country's service industry - the hotel and restaurant sector in particular - and resulted in lower demand for travel to Europe.
In France, the travel and tourism sector's contribution to GDP will grow 1.1 percent this year, down from a previous forecast of 2.9 percent, the World Travel and Tourism Council said on Monday.
Still, the brighter overall picture should alleviate fears the French economy continued to slow down this quarter after unexpectedly stagnating in the second quarter of the year. German private sector growth slowed in August, but remained robust overall, its PMI showed, suggesting Europe's biggest economy is set to keep on expanding in the summer months after it grew more than expected in the second quarter.