Growth in the euro zone's private sector slowed unexpectedly in June with the gap between Germany and France growing even wider. Hayley Platt looks at the outlook for the region.
Business growth in the euro zone's private sector took a turn for the worse in June, despite companies slashing prices. And there were again big disparaties between Europe's two top economies. French business acitivity shrank at the fastest rate in four months. While Germany continued to lead the way, although at a slightly slower pace. Rob Dobson is from Markit, the company behind the data. SOUNDBITE: Rob Dobson, senior economist, markit, saying (English): "The German index coming down to a low, coming off recent highs, signalling that maybe they might be a little bit of a loss of momentum in the German economy as a whole. Service activity rising slightly with manufacturing activity rising slightly slower." The problem area was clearly France, where the index fell 1.5 % to below the key 50 level which indicates growth. Commerzbank's Peter Dixon. SOUNDBITE: Peter Dixon, Economist, saying (English): "It's an economy which hasn't reformed to quite the same extent of some of its euro zone peers and consequently it's more difficult I think to generate growth under these circumstances. So clearly France is one to watch because unless we see significant signs of a turnaround there that's going to act to hold down the euro zone averages." Other key countries in the euro zone are doing relatively well - thanks to strong exports. SOUNDBITE: Rob Dobson, Markit, saying (English): "If that continues to filter through, periphery will continue to do well. But if they become reliant on trade with France and Germany again, it might not be so rosy." The concern now is, if demand for the euro zone as a whole doesn't pick up. The ECB may be put under pressure to introduce another round of QE by the end of the year.