German economy unfazed by Britain’s EU referendum

Bloomberg

Germany’s economy is showing little sign that Britain’s referendum on European Union membership is damping investment, according to Markit Economics.
A Purchasing Managers’ Index for manufacturing and services was at 54.1 in June after a reading of 54.5 in May, the London-based company said on Thursday. While that’s the lowest in two months, it’s well above the 50 mark that divides expansion from contraction. Economists had forecast a reading of 54.3.
While German economic growth may slow this quarter, Markit said that follows an “impressive” performance at the start of the year.
The survey points to a “further solid rise” in gross domestic product, said Oliver Kolodseike, an economist at Markit. “The outcome of the U.K.’s EU referendum does not seem to have an impact on hiring or investment decisions.”
Respondents cited a positive economic environment and rising demand from overseas markets including the U.S. and China, Markit said. A gauge of manufacturing rose to 54.4 from 52.1, its highest level in over two years, while a services index fell to 53.2 from 55.2.
Input costs rose for a second month, reflecting higher staff costs and rising raw material prices. Kolodseike said this suggests that “deflationary pressures have bottomed out.”
That should come as good news for the European Central Bank as it seeks to stoke price growth in the euro area with a mix of low rates, bond purchases and cheap loans.
Markit’s measure of French private-sector activity dropped to 49.4 from 50.9, the firm said earlier on Thursday. Economists predict the composite index for the euro area, which is published later this morning, will also decline.