Businesses across Europe lost momentum last month, with ominous signals coming from Britain just as it embarks on EU divorce negotiations, but the euro zone appears to have entered the second half in rude health. David Pollard reports.
Everyone loves a bargain - especially when Brexit pushes up the pound. And, seemingly, pushes down the UK economy. The latest PMI completes an unhappy trio this week of manufacturing, construction and now services. All coming in below forecasts. (SOUNDBITE) (English) FIDELITY INTERNATIONAL, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "The evidence is that the consumer is slowing down very rapidly. What we're not yet seeing is a sufficient uptick in business investment and trade to offset that." At a four-month low of 53.4 in June for services, it still points to expansion. But the forward-looking expectations index was weaker than it's been since just after last June's Brexit vote. (SOUNDBITE) (English) FIDELITY INTERNATIONAL, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "The honeymoon period that we enjoyed post referendum has really come off the boil ... And ahead of the Brexit negotiations that's a real problem because we now face two years at least of difficult conditions for the U.K. economy." There are bargains in the euro zone - but perhaps less of a rush for them. New data for May shows retail sales up 2.6 per cent on the year. That's higher than forecast. As is the euro zone's composite PMI for services and manufacturing. At 56.3 for June, it's still close to a six-year high. (SOUNDBITE) (English) FIDELITY INTERNATIONAL, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "The interesting thing about the numbers is quite how broad based they are. We're seeing recoveries really right the way across the euro zone and across different sectors but particularly the service sector which of course is so important." After recent hints from Mario Draghi, economists see the ECB edging closer to tightening its ultra-loose stimulus programme. That's showing no signs of spoiling the sentiment just yet .... New business is strong - and survey compilers IHS tip a healthy 0.7 per cent upswing in growth this quarter. That too above previous forecasts.