Eurozone private sector logged one of the strongest growth seen over the past two decades in August as the further reopening of the economy underpinned expansion in the services activity, flash survey results from IHS Markit showed on Monday.

The flash composite output index declined to 59.5 from a 15-year high of 60.2 in the previous month. The reading was forecast to fall marginally to 59.7.

Nonetheless, a reading above 50 suggests expansion. The latest score matched that seen in June to register the joint-second-fastest expansion seen since 2006.

Service sector growth exceeded that of manufacturing for the first time since the pandemic, buoyed by the further reopening of the economy.

The services Purchasing Managers’ Index came in at 59.7, while the score was expected to remain unchanged at consensus 59.8.

The manufacturing PMI fell to 61.5 from 62.8 a month ago. The reading was forecast to drop to 62.0.

“Although the spread of the Delta variant caused widespread problems across the region, curbing demand and causing further supply issues, firms benefited from virus containment measures easing to the lowest since the pandemic began,” Chris Williamson, chief business economist at IHS Markit said.

While the association between the PMI and GDP has broken down since the pandemic began, it is still encouraging that firms continue to report strong rates of output growth, particularly as concerns about the Delta variant could have dented activit, Jack Allen-Reynolds, an economist at Capital Economics, said.

Within the eurozone, Germany continued to lead the expansion, albeit with growth softening from July’s 23-year record high. Meanwhile, the expansion moderated to a four-month low in France, cooling further from June’s recent peak.

Germany’s composite output index dropped to 60.6 from 62.4 in July. The score was forecast to fall to 62.2.

By sector, services activity grew at a sharp rate that was only just shy of July’s peak. On the other hand, manufacturing showed a more notable loss of momentum.

The services PMI fell to 61.5 from 61.8 in July, but the score was above economists’ expectations of 61.0. At the same time, the factory PMI declined to a six-month low of 62.7 from 65.9 a month ago. The expected level was 65.0.
France’s flash composite output index slid to a four-month low of 55.9 in August from 56.6 in July. Although the headline figure was at its lowest level since April, it was comfortably above the long-run average of the series.

The factory PMI came in at 57.3, down from 58.0 in July. The reading came in line with economists’ expectations. The services PMI dropped unexpectedly to 56.4 from 56.8 in the previous month. The score was forecast to rise to 57.0.


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