Eurozone economy booms at fastest rate in 21 years

Brussels, Belgium Published: Jul 23, 2021, 09:41 PM(IST)

Eurozone. The headquarters of the European Central Bank (ECB) is pictured in Frankfurt am Main, western Germany, on March 11, 2021. Photograph:( AFP )

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IHS Markit's PMI composite index noted growth in July, advancing from 59.9 in June to 60.6, well above the 50-point threshold that indicates expansion

Business activity in the eurozone shot ahead at its fastest rate in 21 years in July, a closely watched survey said on Friday, as the economy went into full throttle with loosened COVID-19 restrictions.

But the survey showed that the spread of the Delta variant was beginning to chip away at business confidence, with concern that new measures could again sow chaos in the economy. 

The PMI composite index from economic data group IHS Markit said activity rose from 59.5 in June to a strong 60.6 in July, well above the 50-point level that indicates growth.

With the summer in full swing, Chris Williamson, chief economist at IHS Markit, said that the tourism and hospitality sectors were especially responsible for pushing the economy to historic growth levels.

However, for manufacturers, supply chain delays remained a "major concern", hurting production and pushing costs higher. 

This, he warned, would likely "feed through to higher consumer prices in coming months" and make itself felt in the inflation data.

Also read | Eurozone enters double-dip recession in first quarter

Pointing to a darker days ahead, Williamson said the delta variant posed "a major risk to the outlook". 

"Not only have rising case numbers led to a slide in business optimism to the lowest since February, further covid waves around the world could lead to further global supply chain delays and hence ever higher prices."

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