Economic activity in the Eurozone fell in July. These changes are imperceptible and in some cause is the signal that the bad effects of Brexit have yet to take hold in continental Europe. The eurozone economy is proving resilient to the fallout from Britain’s decision to leave the EU. New data suggested on this Friday, even as signs of a downturn intensified in the UK. Data monitoring company Markit did not allege Britain’s vote to leave the EU as the specific cause of the downturn. In this situation 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.A separate European Central Bank survey of private sector forecasts also showed economists expect the British decision to have only a minor impact on the region.
“The eurozone economy showed surprising resilience in the face of the UK’s vote to leave the EU and another terrorist attack in France,” said Chris Williamson, chief economist at Markit. He added that the fragility of the region’s recovery left plenty of room for speculation about further stimulus by the ECB next year.
Brexit could dent trade between the eurozone and the UK, while the British vote has also stoked concerns about the EU’s future cohesion, contributing to a steep fall in bank stocks in countries such as Italy and Spain immediately after the referendum.
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.”
Some economists expect the eurozone’s monetary policymakers to unveil a fresh round of stimulus at their next policy vote in early September.

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