According to the Markit composite PMI index, private sector growth in the eurozone has reached a record level not seen since July 2000. The IHS Markit survey results on Friday showed this fast pace is due to the “reopening of the economy” as Covid measures have been eased across Europe.
According to this first estimate, the index rose from 59.5 in June to 60.6 this month hitting a 252-month high. “The reopening of the economy accompanying the easing of health restrictions led to the strongest growth in overall activity in the eurozone for 21 years in July," the research firm said in a press release.
The services activity grew the most in 15 years, while the manufacturing industry hit a four-month low due to “deterioration of the supply chains.”
Markit economist Chris Williamson has praised the “very good performance” of the eurozone economy at the start of summer 2021. “The services sector is in particular the one which benefits the most from the lifting of the measures of fight against Covid-19 and improving vaccination coverage, which are particularly beneficial in the hospitality, travel and tourism sectors,” he said.
In France, private sector activity also continued to expand in July, driven by demand, although the pace of growth slowed somewhat. The composite Flash index of global activity fell from 57.4 points last month to 56.8 in July. Service sector output growth continued to surpass that seen in the manufacturing sector due to reduced lockdown restrictions. The manufacturing PMI fell to 58.1 from 59.0 in June while the services PMI was 57.0, down from 57.8 last month.
Germany led the eurozone’s upturn, reporting the strongest monthly expansion since data first became available in January 1998. The country’s private sector growth was driven by an ongoing rapid recovery in services activity. The composite output index rose to 62.5 in July from 60.1 last month and the manufacturing PMI came in at a three-month high of 65.6, up from 65.1 in June. The services PMI also hit a record 62.2 from 57.5 in the previous month.
Markit has indicated that good performances are expected in August as “a further strengthening of demand” was observed in July in all manufacturing and services sectors in the 19 countries that have adopted the single European currency. “The increase in the overall volume of new business has indeed accelerated compared to the previous month, posting its highest rate since May 2000,” the press release said.