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Eurozone services activity firms more than expected

06 May 2008, 17:30 CET

(BRUSSELS) - Activity in the vast services sector of the 15 nations sharing the euro improved more than expected in April, according to a survey on Tuesday, offering an increasingly rare ray of light for the eurozone economy.

The NTC Research service sector purchasing managers index (PMI) rose in April to 52.0 points from 51.6 points the previous month, revising up a provisional estimate of 51.8 points.

A reading below 50 points indicates contraction.

NTC put the improvement down to strong activity in regional powerhouse Germany and firm growth in France while the service sectors of Spain and Italy continued to contract.

Despite the improvement in the service sector index, economists said that the eurozone economy was struggling to cope with a range of headwinds and that some countries were faring better than others.

"The eurozone economy is losing momentum, gradually and in a very uneven fashion," said Bank of America economist Holger Schmieding. "This is the major message of the April purchasing managers indices."

Likewise, economist Hoard Archer with consultants Global Insight said: "Eurozone services activity is still markedly below the levels seen in mid-2007 as it continues to be hit by the credit crunch and financial market turmoil, a very strong euro, muted consumer spending, softer growth in key export markets and elevated costs."

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