Updating the Eurozone economy
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Eurozone companies are reporting the fastest expansion in more than two decades, fueling hopes of a rapid rebound this summer despite the spread of the Delta variant.
The flash index of IHS Markit’s composite purchasing managers – based on a survey of eurozone companies – rose to 60.6 in July, from 59.5 in June. Growth indicates that Europe’s economy is growing at a healthy pace after Covid-19 stocks were lifted in the spring.
It is the highest PMI reading for the eurozone since July 2000 and strictly exceeds the expectations of economists polled by Reuters, who had predicted a reading of 60. A score of more than 50 indicates that a majority of the companies report an expansion from the previous month.
However, the survey also found that many companies are struggling to keep pace with growing demand, which causes a shortage of materials, such as semiconductors and steel, and has led to rising selling prices of goods and services.
“The eurozone is enjoying a summer growth as the easing of antivirus fight restrictions in July has pushed growth to the fastest for 21 years,” said Chris Williamson, chief economist at IHS Markit.
“Supply chain delays remain a major priority for manufacturing, however, limiting production and pushing companies’ costs down, ”he added.
Service companies in the euro area have seen the strongest growth in activity in 15 years, as they have benefited from the loosening of blockchain measures and a recovery in consumer spending. PMI services rose to 60.4, from 58.3 in the previous month.
Meanwhile, the manufacturing PMI fell to a four-month low of 62.6, reflecting supply chain restrictions and lengthening delivery times.
Strong performance in the eurozone contrasted with the United Kingdom, where rising infections, subdued customer demand and a shortage of workers slowed growth in July despite the easing of Covid-19 restrictions, a survey carefully observed. showed Friday.
The flash, or interim, index of procurement managers in the UK published by the IHS research group Markit and the Chartered Institute of Procurement and Supply, which provides a measure of the health of services and manufacturing sector, fell to 57.7 in July from 62.2 in the previous month.
The reading was lower than the 61.7 forecast by economists interviewed by Reuters, while it was still above the 50 mark indicating a majority of companies signaling an expansion.