BRUSSELS – Business activity in the eurozone cooled slightly this month due to supply pressures but continues to hover near a 15-year high, a closely-watched survey by IHS Markit showed today.
The composite purchasing managers’ index (PMI) reading, which measures corporate confidence, slipped to 59.5 this month.
Last month it stood at a strong 60.2 . A figure above 50 indicates growth.
The dip was explained in part by some business concern over the effects of the Delta variant of the coronavirus, but especially by demand outstripping supply as activity bounced back vigorously in the 19-nation eurozone.
“Supply chain delays continue to wreak havoc,” said IHS Markit’s chief business economist Chris Williamson.
The duo of surging demand and supply problems was pushing costs higher, he said, leading to “another near-record increase in average selling prices for goods and services”.
While that could fuel worries about inflation, Williamson said “inflationary pressures may have peaked for now”.
The survey showed service sector growth overtaking that of manufacturing for the first time in the pandemic recovery. Jobs growth was at a 21-year peak.
“The sustained upturn in demand and improved prospects due to rising vaccination rates led to buoyant optimism about the year ahead,” IHS Markit said.
Among the eurozone countries, Germany led the survey, though the supply constraints on its vital manufacturing sector were more marked.
France was faring less well, with the PMI reading further cooling from a June high, with factory output growth slowing to the slowest rate in seven months.
Meanwhile, Britain’s private sector business activity also slowed sharply this month due to ongoing staff and supply shortages, a survey showed today.
The composite PMI reading hit a six-month low of 55.3 points, compilers IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) said in a statement.
That compared with a reading of 59.2 in July, but it held above the key 50 level.
“An abnormally large slowdown in overall activity this month offers a stark warning to the UK economy that the accelerated levels of growth we’ve seen earlier this summer are not sustainable,” CIPS group director Duncan Brock said in a statement.
“It was the slowest output expansion for six months, and the worst shortages of staff and materials on record are mostly to blame.”
IHS Markit noted that the economy, which fully reopened last month, continued to grow above its pre-pandemic average.
However, it also highlighted “clear signs” of a loss of momentum in the third quarter, or three months to September.
“Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages,” said Williamson.
“Supplier delays have risen to a degree exceeded only once before – in the initial months of the pandemic – and the number of companies reporting that output had fallen due to staff or materials shortages has risen far above anything ever seen previously in more than 20 years of survey history.”
Recent official data showed that Britain’s economy rebounded 4.8% in the second quarter as the government began relaxing lockdown restrictions amid its fast-paced vaccination programme.
However, the rebound faces challenges as global supply chain bottlenecks persist and a jobs protection programme is set to end in September. – AFP, August 23, 2021
