RTTNews - Indicating that the Eurozone service sector is moving close to stabilization, the purchasing managers' index or PMI for the sector rose to 49.9 in August from 45.7 in July, data released by the Markit Economics showed Thursday. It was also well above the flash reading of 49.5.

A PMI reading above 50 suggests expansion in the sector, while below 50 suggests contraction. The index has now remained below the neutral mark of 50 for fifteen successive months, by far the most sustained period since the series began in July 1998, the Markit said.

According to the report, the rate of contraction in incoming new business eased further in August from February's record low.

Confidence amongst Eurozone service providers strengthened to the second greatest extent in the survey history in August. Moreover, optimism reached its highest level since April 2007 and was above the flash estimate.

There was also an improvement in the trend in employment during August. Although staffing levels fell for the fourteenth consecutive month, the rate of job losses was the weakest since last November. August data also pointed to further decreases in average costs and output prices.

Although indexes for activity, new business and employment are still in contraction territory, the record gains in their levels during August combined with improving confidence amongst service providers suggest that the sector will soon follow manufacturing out of recession, said Markit Senior Economist Rob Dobson.

However, concerns remain about the disparities emerging between the member nations, with France and Germany rebounding much faster than Italy, Spain and Ireland. Setting the appropriate level of monetary stimulus will become increasingly difficult if these national variations become more firmly rooted, Dobson added.

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