The Eurozone’s private sector grew at its fastest rate in over two years in July, according to survey data, with a key gauge of business activity improving slightly compared to an earlier estimate.
The IHS Markit Eurozone composite purchasing managers’ index – which measures the health of the private economy – rose to 54.9 in May from 48.5 in June.
It was the fastest growth in the gauge since 2018 and July’s figure was slightly above a “flash” estimate of 54.8. A score above 50 indicates expansion.
Chris Williamson, chief business economist at data firm IHS Markit said: “France and Germany enjoyed especially strong gains.”
“Renewed growth was also recorded in Spain and Italy as Covid-19 containment measures continued to be relaxed.”
Services sector growth lower than expected
However, the gauge that measures the all-important services sector came in lower than expected. The final services PMI score was 54.7, up from 48.3 in June but below the flash estimate of 55.1.
IHS Markit said new business rose at a relatively modest pace. Growth was also driven by domestic markets, with export trade remaining weak.
The company managers who responded to the survey said this was a trend across the private sector as a whole. New export business declined for the 22nd successive month in July, IHS Markit said.
A resurgence of coronavirus cases in some parts of Europe has worried policymakers and economists. Rising cases in Spain have spelled trouble for its tourism industry, for example, after the UK said travellers would have to quarantine upon return.
Firms across the Eurozone private sector made further cuts to their workforce numbers. It was the fifth month in a row that companies reduced staffing levels.
“Whether the recovery can be sustained will be determined first and foremost by virus case numbers,” said Williamson.
“The recent signs of a resurgence pose a particular risk to many parts of the service sector, such as travel, tourism and hospitality.”