IHS Markit euro area composite PMI weakens in June

A key barometre of the euro area economy retreated, weighed down by weakness in services sector activity.

IHS Markit's composite purchasing managers output index for the Eurozone retreated from 56.8 for May to 55.7 in June - a five-month low.

Economists had forecast a reading of 56.6.

Analysts had warned in the weeks prior to Friday's survey data that recent strength in the PMIs was likely to buckle.

Nonetheless, the consultancy's chief business economist emphasised the figures should be viewed through the prism of recent lofty readings on activity.

"Despite the June dip, the average expansion in the second quarter has been the strongest for over six years and is historically consistent with GDP growth accelerating from 0.6% in the first quarter to 0.7%," he said.

Weakness in ouput was centred on services, with a separate gauge for that sector falling from 56.3 to 54.7, while another linked to manufacturing rose from 57.0 to 57.3 - a 74-month high.

High order inflows and business confidence meant companies continued to increase payrolls at one of the quickest paces in 10 yeas, expanding capacity to meet rising demand, IHS Markit said.

Services was not an exception on the hiring front.

"The service sector meanwhile continued to enjoy its best spell of employment growth since early-2008."

"The strong jobs growth was also a reflection of ongoing elevated levels of optimism about future growth, with optimists continuing to exceed pessimists, albeit to the lowest degree for five months."

Price pressures on the other hand reportedly abated, as global commodity prices slipped.

Total new orders eased to their lowest in four months, reflecting weakness in services. However, factories reported new orders intake running at its strongest since February 2011.

That was due in part to sales abroad, exports - including within the region - continued rising at one of its fastest clips of the past six years, with a weaker euro playing a hand in that result.