Euro zone business activity picks up

LONDON: Euro zone business growth accelerated in June, offering encouragement to the European Central Bank to tighten policy, but optimism among purchasing managers was at its lowest ebb since late 2016, a survey found.

Faster growth across the currency union, alongside rising price pressures, will reassure ECB policymakers who last month said the bank would shut its hallmark bond purchase scheme by the end of the year.

But in a balanced announcement reflecting uncertainties hanging over the economy, the ECB signalled on June 14 that any interest rate hike was still distant.

Britain provided a similar story of stronger growth. Its large services industry grew last month at its fastest rate since October, suggesting the economy might be strong enough for the Bank of England to raise rates in August, as expected.

IHS Markit´s Final Composite Purchasing Managers´ Index for the euro zone, seen as a good overall indicator of growth, rose to 54.9 in June from May´s 54.1, comfortably above the 50 mark separating growth from contraction. That beat an earlier flash reading of 54.8, but the latest PMI is lagging much higher numbers from around the turn of the year.