An initial estimate shows that business activity across the eurozone continued to grow strongly during August, with a further easing of COVID-19 restrictions boosting the service sector.

The ‘flash’ purchasing managers’ index (PMI), compiled by research group IHS Markit, came in at 59.5. This was slightly below July’s 60.2, indicating a slight slowdown in the rate of growth, amid concerns about the rise of the Delta variant of COVID-19.

For the first time since the pandemic began, growth in the service sector outpaced that seen in manufacturing, helped by the further reopening of businesses in areas such as travel and hospitality.

Employment growth matched a 21-year high recorded in July, according to the survey, as firms expanded their capacity to deal with a surge in orders.

Optimism high

Optimism levels among eurozone firms remained at high levels in August, due to the sustained upturn in demand, and improved prospects as vaccination rates rose.

Companies faced higher costs during the month, however, due to supply delays and increased demand.

“These costs were commonly passed on to customers, in the form of higher selling prices for both goods and services,” IHS Markit said.

The research group said input cost and selling-price inflation rates were the third-highest recorded over the past two decades, exceeded only by the increases seen in June and July.

Chris Williamson (IHS Markit Chief Business Economist) said that the eurozone’s economic recovery kept up its “impressive momentum” in August, adding that the PMI’s average in the third quarter of 2021 so far is the highest for 21 years.

“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,” he said.