Euro-Area Growth Stays Strong as ECB Plans to Ease Stimulus

(Bloomberg) -- The euro-area economy showed it’s still robust as the European Central Bank prepares to wind down its bond- purchase program.

IHS Markit’s composite index of manufacturing and services increased to 54.4 in August from 54.3. Economists surveyed by Bloomberg had predicted a reading of 54.5.

Overall third-quarter growth could match the second quarter’s 0.4 percent, and indicators of current activity, employment and prices were all elevated, the report showed.

Euro-Area Growth Stays Strong as ECB Plans to Ease Stimulus

Still, the current rate of expansion is one of the weakest over the past year and a half, Markit said, and firms’ expectations for future growth slipped to the lowest for almost two years.

“The August survey sends a hawkish signal to policymakers,” said Chris Williamson, an economist at IHS Markit. “But the forward-looking indicators suggest the business mood could cool as summer passes. The risks seem tilted to the downside.”

The ECB has cited the region’s “solid and broad-based” expansion as a reason to continue with the plan to end asset purchases in December and lay the ground for a possible interest-rate hike in late 2019.

At the same time President Mario Draghi has noted that global uncertainties are “prominent.” Manufacturing would be the most susceptible to any trade-led slowdown, Markit said.

The ECB will publish new economic projections for the euro zone on Sept. 13 after officials meet to set monetary policy.

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