Economic Growth in the Eurozone in August Nears Highest Level in 15 Years

Supply chain issues have kept economic growth in the Eurozone in August near its highest level in 15 years, with the services sector surpassing industry growth for the first time since the pandemic began, a report from London-based Markit revealed on Monday.

The Purchasing Managers’ Index (PMI) for the Eurozone’s private sector fell by 0.7 points in August compared to July, sliding to 58.5 points, estimated the London-based economic data collection and processing firm.

Last month, it reached its highest level since June 2006.

The spread of the delta variant is causing problems across the region, limiting demand and creating new supply issues, but companies benefit from the most significant easing of virus control measures since the pandemic began, explains Markit’s chief economist Chris Williamson. 

The pace of growth has only slightly weakened due to widespread supply chain issues, and the services sector has surpassed industry growth for the first time since the pandemic began, driven by the continuous easing of corona restrictions, Markit highlights.

Demand has remained at its highest level in the past two decades, and since it has grown stronger than supply, company costs and selling prices have risen again at the strongest rate in 20 years, although inflationary pressures may have peaked, Markit notes.

– It is encouraging that the highest number of jobs has been created for the second consecutive month in 21 years, reflecting companies’ efforts to increase business capacities and keep pace with demand, which should ultimately alleviate price pressures, explains Williamson.

The pace of hiring in the industry has slightly slowed, partly due to labor shortages, while the services sector has created the most jobs since September 2018.

The continuous strengthening of demand and improved business prospects due to COVID-19 vaccinations have supported optimism among business leaders, although sentiment has been slightly dampened by the spread of the delta variant of the coronavirus, the London firm observes.

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