Eurozone business climate rises despite Covid-19 wave

Photo: EPA

The business climate in the Eurozone rose at its fastest pace in 15 years in July despite worries linked to increasing Covid-19 cases in major industrial countries. The growth was driven by the zone's key service sector, Reuters reported, quoting details of official survey. Supply chain disruptions and labour shortages resulted in higher prices of input materials across Europe. They rose at their fastest p[ace in over two decades.

IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, climbed to 60.2 last month from June's 59.5, its highest level since June 2006, and well above the 50 mark separating growth from contraction.

"Europe's service sector is springing back into life. Easing virus restrictions and further vaccination progress are boosting demand for a wide variety of activities, especially in tourism, travel and hospitality," said Chris Williamson, chief business economist at IHS Markit. With more of the services industry reopening, the sector's PMI index rose to 59.8 from 58.3 in June, below the preliminary estimate of 60.4 but still its highest final reading since June 2006.

Manufacturing activity continued to grow at a record pace last month, a survey showed, but widespread shortages of materials and poor transport availability pushed the factory input prices index to its highest reading since the survey began in June 1997. Inflationary pressures were also felt by services firms and the composite input price index nudged up to 69.9 from 69.8, its highest in nearly 21 years.

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