Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Euro zone businesses boomed in July but confidence weakened

Economic IndicatorsJul 23, 2021 11:01
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: People enjoy the sun at an outdoor restaurant, despite the continuing spread of coronavirus disease (COVID-19), in Stockholm, Sweden March 26, 2020. TT News Agency/Janerik Henriksson via REUTERS /File Photo

By Jonathan Cable

LONDON (Reuters) -Euro zone business activity expanded at its fastest monthly pace in over two decades in July as the loosening of more COVID-19 restrictions gave a boost to services but fears of another wave of infections hit business confidence, a survey showed.

With vaccination rates accelerating and the burden on health care easing governments have lifted some of the curbs they imposed to try and contain the virus' spread, unleashing pent-up demand.

IHS Markit's Flash Composite Purchasing Managers' Index, seen as a good guide to economic health, climbed to 60.6 in July from 59.5, its highest reading since July 2000. It was ahead of the 50-mark separating growth from contraction and a Reuters poll estimate for 60.0.

"Better than expected PMIs confirm the strong rebound expected for 3Q, as reopening services make up for the slight decline in manufacturing output due to supply chain problems," said Bert Colijn at ING.

"Easing restriction measures are boosting service sector activity at the moment, but concerns about the spread of the Delta variant resulted in a somewhat weaker business outlook for the year ahead," Colijn said.

A PMI covering the bloc's dominant service industry jumped to 60.4 from 58.3, its highest since June 2006 and ahead of the Reuters poll forecast for 59.5.

Indicating that pace won't slow anytime soon, demand was racing. The new business index rose to 59.7 from 58.7, one of the highest readings in the survey's 23 year history.

The strong recovery in Germany, Europe's biggest economy, continued with its PMI hitting the highest level in nearly a quarter of a century, fueled by strong demand partly resulting from an easing of virus containment measures.

But French activity weakened more than forecast and fell to a three-month low as shortages of materials and transportation delays impacted firms.

And in Britain, outside the euro zone, the rapid economic bounce-back from the pandemic slowed sharply as a new wave of cases forced hundreds of thousands of workers to self-isolate under government rules to limit the spread of the disease. [L8N2OY58T]


Factories had another blistering month. The manufacturing PMI only dipped from June's record high of 63.4 to 62.6. An index measuring output that feeds into the composite PMI fell to 60.9 from 62.6.

But the spread of the highly transmissible Delta variant of the coronavirus has further impacted already disrupted global supply chains and pushed prices for raw materials factories need soaring.

The input prices index held steady at June's survey high of 88.5.

On Thursday the European Central Bank pledged to keep interest rates at record lows for even longer to boost sluggish inflation.

It expects inflation in the euro zone as a whole to hit 1.9% this year before falling back to 1.5% in 2022 and 1.4% the year after, well below its 2% target.

The ECB also warned the rapidly spreading Delta variant of the coronavirus posed a risk to the bloc's recovery and rising infections and fears of another wave of the coronavirus put a dent in overall confidence. The composite future output index slumped to 67.8 from 71.9, its lowest February.

That chimes with European Commission data released on Thursday which showed consumer confidence fell this month.

"While actual and prospective activity trends remain very solid, it is clear that the recent increase in new coronavirus trends and the spread of the more transmissible Delta variant are leaving a mark on euro zone confidence," said Ricardo Amaro at Oxford Economics.

Euro zone businesses boomed in July but confidence weakened

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email