4 May 2005, 12:45  French and Spanish consumers helped to keep the euro zone service sector growing

French and Spanish consumers helped to keep the euro zone service sector growing in April, but optimism waned as companies felt the chill from a downturn in manufacturing, surveys showed on Wednesday. The Eurozone Service Sector Business Activity Index, produced by NTC Research, slipped to 52.8 from 53.0 in March, just above a 52.6 consensus forecast and well clear of the 50 line which divides growth from contraction. However, the services economy shrank in Italy and growth weakened in Germany. NTC said companies throughout the region were struggling to sell services to the manufacturing sector. "The industrial sector ... is struggling because of high oil prices and the strength of the euro and that sector is cutting back on its purchases of services," said Chris Williamson, NTC's chief economist. Williamson said buoyant housing markets in France and Spain were helping to support services companies there, but a rise in the overall level of new business reported in the euro zone masked underlying concerns about the strength of demand. The business expectations index, which measures how confident services companies feel about business in 12 months' time, fell four points to 63.5 from 67.5 in March.

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