Euro zone July business activity soars but Delta worries hit confidence
Euro zone business activity in July expanded at its fastest monthly pace in more than 20 years as services were boosted by an easing of Covid curbs, although fears of another wave of infections hit confidence, according to a survey released Friday.
The IHS Markit Flash Composite Purchasing Managers’ Index climbed to 60.6 in July from 59.5, its highest reading since July 2000. A mark above 50 signifies growth.
“The euro zone is enjoying a summer growth spurt as the loosening of virus-fighting restrictions in July has propelled growth to the fastest for 21 years,” said IHS Markit chief business economist Chris Williamson.
“The services sector in particular is enjoying the freedom of loosened COVID-19 containment measures and improved vaccination rates, especially in relation to hospitality, travel and tourism.”
With vaccination rates accelerating and the burden on health care easing governments have lifted some of the curbs they imposed to try and contain the virus’ spread, unleashing pent-up demand.
A PMI covering the bloc’s dominant service industry jumped to 60.4 from 58.3, its highest since June 2006. The new business index rose to 59.7 from 58.7, one of the highest readings in the survey’s 23 year history.
Meanwhile, factories were also showing signs of the continuing rebound from the landemic. The manufacturing PMI dipped slightly from June’s record high of 63.4 to 62.6. An index measuring output that feeds into the composite PMI fell to 60.9 from 62.6.
However, the spread of the highly transmissible coronavirus Delta variant impacted further already disrupted global supply chains and pushed prices for raw materials factories need soaring.
The input prices index held steady at June’s survey high of 88.5.
Rising infections and fears of another wave of the coronavirus put a dent in overall confidence. The composite future output index slumped to 67.8 from 71.9.