2014.09.0405:25:16UTC+00Slight decline present for eurozone services

The eurozone’s fragile recovery was met with another obstacle today when its services sector declined slightly last month.

According to Markit’s purchasing managers’ index (PMI) of the region’s services industry, its growth slowed down during the month of August for a grade of 53.1 from July’s 54.2. A composite index combining services and manufacturing likewise feel from last month’s 53.8 to 52.8 due to the struggles of factories in the eurozone.

Chief economist Chris Williamson from Market claimed that the disappointing results could add pressure on the European Central Bank (ECB) to introduce policy in the form of quantitative easing to spur growth. He said that, “The eurozone economy is defying expectations of gaining momentum, which will no doubt add to calls for the ECB to embark on full-scale quantitative easing.”

A positive result could be found in the PMI’s sub indices for individual countries, however, with company activity levels in a newly structured Spain increasing from 56.2 to 58.1 for the fastest pace in almost eight years. ECB President Mario Draghi had previously called for members of the monetary union to enact economic reforms to promote growth.

Members such as Italy and France who have so far not committed to a major reform program posted poor activity levels. Italy treaded into contraction below the 50 level with a mark of 49.8 from 52.8 while France barely maintained an expansion at 50.3 from the 50.4 of the previous month. Italy is currently in its third recession since the crisis while French President Francois Hollande is struggling to meet the EU’s budget target.

According to Williamson, “The PMI data add to the view that, in the absence of governments taking tough measures to boost competitiveness and productivity, economic performance will remain disappointing even with further ECB action.”