Consumer confidence declined this month, according to data issued by the European Commission
In July, Euro zone business activity grew at its best monthly rate in almost two decades as additional COVID-19 limitations were eased, boosting services, but fears of another wave of infections harmed business confidence. Governments have eased some of the restrictions they set to try to prevent the virus’ spread, releasing pent-up demand.
The Flash Composite Purchasing Managers’ Index from IHS Markit, which is seen as a good indicator of economic health, rose to 60.6 in July from 59.5, its highest reading since July 2000. It was over the 50-point threshold that separates expansion from contraction, as well as a Reuters poll expectation of 60.0.
“The euro zone is experiencing a summer growth spurt,” said Chris Williamson, chief business economist at IHS Markit. “The relaxing of virus-fighting regulations in July has boosted growth to the fastest in 21 years.”
A PMI for the bloc’s largest service industry rose to 60.4 from 58.3, the highest level since June 2006 and ahead of the 59.5 predicted by Reuters.
Demand was surging, indicating that the pace will not be slowed anytime soon. The new business index increased to 59.7 from 58.7, marking one of the survey’s greatest results in its 23-year history.
In the meantime, manufacturers have suffered yet another scorching month. The manufacturing PMI only fell from a record high of 63.4 in June to 62.6 in July. The output index that contributes into the composite PMI dropped to 60.9 from 62.6.
However, the development of the highly transmissible Delta version of the corona virus has further disrupted already strained global supply chains, sending raw material costs rising.
The input prices index remained unchanged at 88.5, the highest level since the survey began in June.
Infections are on the rise, and fears of another corona virus outbreak have shattered confidence. The composite future output index fell to 67.8 from 71.9 in February, its lowest level ever.
Consumer confidence declined this month, according to data issued by the European Commission on Thursday.