Eurozone companies are expanding at the fastest rate in 21 years


Economic Developments in the Euro Zone

Eurozone companies report that its expansion rate is the fastest in more than 20 years. Although the Delta variant has spread, it is still expected to rebound quickly this summer.

According to a survey of Eurozone companies, IHS Markit’s comprehensive purchasing managers’ index rose from 59.5 in June to 60.6 in July. This growth shows that the European economy is growing at a healthy rate after the Covid-19 blockade was lifted in the spring.

This is the highest PMI reading in the Eurozone since July 2000, slightly higher than the expectation of economists surveyed by Reuters, who had predicted the reading to be 60. A score of more than 50 indicates that most companies report an expansion from the previous month.

However, the survey also found that many companies are struggling to keep up with increasing demand, which has led to shortages of materials such as semiconductors and steel, and pushed up the prices of goods and services.

Chris Williamson, chief business economist at IHS Markit, said: “The Eurozone is enjoying rapid summer growth as restrictions on the fight against the virus were relaxed in July, pushing growth to the fastest level in 21 years.”

“However, supply chain delays are still a major problem in the manufacturing industry, which limits production and pushes up the company’s costs,” he added.

The services sector in the Eurozone reported the strongest activity growth in 15 years as they benefited from the relaxation of lock-in measures and the rebound in consumer spending. The service industry PMI rose to 60.4 from 58.3 last month.

At the same time, the manufacturing purchasing managers’ index fell to a four-month low of 62.6, reflecting supply chain constraints and extended delivery times.

A closely watched survey on Friday showed that despite the relaxation of Covid-19 restrictions, the strong performance of the Eurozone is in stark contrast to that of the United Kingdom, where the increase in the number of infections, weak customer demand and worker shortages led to slower growth in July.

The initial or temporary index of the UK Purchasing Managers Index released by the research institute IHS Markit and the Chartered Institute of Purchasing and Supply in the UK dropped from 62.2 in July to 57.7 in July. The previous month.

The reading is lower than the 61.7 forecast by economists surveyed by Reuters, but still above the 50 mark, which suggests that most companies report expansion.



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