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Eurozone business activity 'resilient' despite Brexit: survey

Britain will trigger Article 50 of the Lisbon Treaty by the end of March next year to formally start the process of leaving the European Union

Economic activity in the eurozone fell in July, but only slightly in a signal that the bad effects of Brexit have yet to take hold in continental Europe, a closely watched survey showed Friday. Data monitoring company Markit did not cite Britain's vote to leave the EU as the specific cause of the downturn, and even said France and Germany showed surprising resilience. Markit said the preliminary July reading for its Composite Purchasing Managers Index (PMI) for the eurozone fell to 52.9 points, a 18-month low, from 53.1 in June. The PMI measures companies' readiness to spend on their business and so gives a good idea of how the underlying economy is performing before official statistics are compiled and released. Any reading above the boom-bust 50 points line indicates the economy is expanding. Markit chief economist Chris Williamson said the eurozone economy "showed surprising resilience in the face of the UK’s vote to leave the EU and another terrorist attack in France." Williamson said the better than expected July figures suggested the eurozone economy "is growing at a sluggish but reasonably steady annual rate of around 1.5 percent". As comparison, the IMF earlier this week said eurozone growth this year would hit a stronger than expected 1.6 percent, instead of the previously forecast 1.5 percent. The IMF warned however that next year growth in the currency bloc would drop to 1.4 percent as the Brexit effects kicked in. Howard Archer of IHS Insight said that the PMI data "may alleviate some concerns over eurozone growth prospects following the Brexit vote." "But it is clearly early days, and much could yet depend on how negotiations between the UK and the EU develop and what political fall-out there is in eurozone countries," he added. Stephen Brown at Capital Economics said the PMI report "suggests that the real economy has generally shrugged off the financial market volatility that followed the UK’s Brexit vote, but remains sluggish." Germany's sharp rise .. "was a big surprise ... that offset weakness in the remaining eurozone economies," he added. The preliminary German composite index rose to 55.3 points, the highest reading of this year. France's rose to 50.0 points, a two-month high.