Business activity in the eurozone jumped at its fastest rate in 15 years this month, a closely watched survey said on Wednesday, as a reopened economy unleashed pent-up demand.
Economic data group IHS Markit said the “impressive progress” of vaccinations was jumpstarting the single-currency area, fuelled by eased restrictions that are at their lowest since September. This “brightening prospect of life increasingly returning to normal has… pushed confidence to an all-time high, fuelled greater spending and encouraged hiring,” said Chris Williamson, Chief Economist at IHS Markit. Accordingly, the firm’s PMI index — which indicates trends in the manufacturing and service sectors — said activity leapt from 57.1 in May to a booming 59.2 in June, far above the 50-point level that indicates growth. The data set the scene for major growth in the second and third quarters, closing the chapter on a double-dip recession that came with the lockdowns of last autumn and winter, the firm said.
The explosive growth was creating its own spillover effects, with supply chains under pressure and prices reflecting the sharp increase in demand, IHS Markit said. “The strength of the upturn – both within Europe and globally – means firms are struggling to meet demand, suffering shortages of both raw materials and staff,” Williamson said. “Under these conditions, firms’ pricing power will continue to build, inevitably putting further upward pressure on inflation in the coming months.”