Eurozone business activity expands faster than expected in July

Business activity in the Eurozone expanded at a much faster rate in July as the region seems to have shrugged off the after-effects of Britain’s vote to leave the European Union, a private survey showed Wednesday.

Markit's final composite Purchasing Managers' Index for the euro zone, released on Wednesday, was 53.2 in July, above a flash estimate of 52.9 and June's 53.1. It remained well above the 50-point demarcation that divides growth from contraction since mid-2013.

"The composite PMIs have held up a little better than people expected after the UK's Brexit vote but that doesn't change the fact that growth is still weak and not doing enough to pick up core inflation," Reuters reported, citing said Stephen Brown of Capital Economics.

Moreover, a sub-index measuring output prices, jumped to a 10-month high of 49.8 from June's 49.1, an indication that the firms have barely cut the product prices. Meanwhile, economic growth in the euro zone halved in the second quarter to 0.3 percent and data-compiler Markit said that if sustained, the latest PMI reading pointed to a similar pace in the current quarter. Last month's Reuters poll predicted the same.

In the monetary policy meeting conducted last month, the European Central Bank left its benchmark bank rate on hold, leaving room for further monetary stimulus. Despite years of ultra-loose monetary policy, inflation is nowhere near the central bank's 2 percent target ceiling and is not expected to get there until at least the end of 2017.

Meanwhile, Euro zone business growth is now in stark contrast to Britain, where a survey suggested its economy is shrinking at the fastest rate since the financial crisis after a sharp hit to activity following the EU referendum in June, Reuters reported.