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A closely watched survey shows that the activity of Eurozone companies has grown at the fastest rate for more than three years, not only boosting orders and creating jobs, but also causing extensive capacity restrictions and pushing up prices.
IHS Markit’s Eurozone Rapid Purchasing Managers Index rose from 53.8 in April to 56.9 in May, the highest level since February 2018. According to a Reuters survey, it exceeded the consensus forecast of economists who had previously forecast 55.1. Readings above 50 indicate that most companies have expanded their reporting activities.
The improvement of the situation shows that the European economy is gradually developing Its recovery From the pandemic and blockade measures to contain it.
Chris Williamson, chief business economist at IHS Markit, said: “As the euro zone continues to move away from Covid-related restrictions, demand for goods and services in the region is soaring at the highest rate in 15 years.”
The survey Several signs were found that the rebound in activity is causing capacity constraints and disrupting the supply chain. According to IHS Markit, French companies said they have been struggling to hire enough employees to meet demand, while German companies reported “severe supply chain bottlenecks” and the fastest increase in output prices since records began in 1997.
The growth of new orders is the highest since 2006, and the growth rate of the backlog of uncompleted orders is the fastest since the record began in 2002. Ex-factory price Services have soared at the fastest rate on record, and service prices have increased slightly, but still the largest increase in two years.
Williamson said: “The imbalance between supply and demand puts further upward pressure on prices.” “How long these inflationary pressures will last depends on how quickly supply recovers in line with demand.”
Christoph Weil, an economist at Commerzbank, said: “Although the correlation between producer prices and consumer prices is not particularly close, and the consumption basket does not include energy The weight of industrial products is only about a quarter, but it can be assumed that this will also decrease slightly. In the medium term, it will strengthen the potential price increase trend in the euro area.”
The Eurozone economy is in a downturn Double-dip recession In the six months ending in March, the economic recovery of the United States and China lags behind that of the United States. But the latest Purchasing Managers Index shows that, driven by the acceleration and stability of vaccination, the single currency area of ??19 countries is likely to resume growth in the second quarter. Relax restrictions About travel and social interaction.
Recently, most areas in Germany have lifted curfews and opened non-essential shops, France has reopened outdoor dining venues, and Italy has lifted quarantine requirements for tourists from many European countries, provided they are tested for Covid-19 The result was negative.
Capital Economics economist Jessica Hinds said: “Today’s data shows that with the relaxation of restrictions, the euro zone economy will continue to recover, and pointed out that the second quarter GDP ( GDP) growth is considerable.” “Although price pressures continue to increase, there is little evidence that the underlying inflation rate will continue to rise.”
The Purchasing Managers Index (PMI) for the service sector in the Eurozone rose to a high of 35.1 in the Eurozone. This index accounts for three-quarters of the EU’s total economy and has been hit hardest by containment measures. The manufacturing equivalent index dropped slightly from an all-time high to 62.8.
France’s composite PMI reading of 57 easily exceeded economists’ expectations, reflecting the country’s earlier removal of restrictions. Compared with neighboring Germany, although the PMI reading rose to 56.2, it was still slightly lower than expected.
The flash PMI was released approximately 10 days before the final PMI, and was based on approximately 85% of the total response.
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