In Germany, the IHS Markit’s final services Purchasing Managers’ Index (PMI) climbed to 61.8 in July, rising from 57.5 in June. On Wednesday, activity in the country’s service sector grew in July at the fastest pace on record. It was the strongest since the survey began more than 24 years ago.
After the lockdowns were lifted and the economy reopened, businesses benefited much. The composite PMI index rose to 62.4 in July from 60.1 in June. Comprising both the service and manufacturing sectors, it surpassed a previous record set in June 2006.
On Monday, data showed that German retail sales rose more than estimated in June when COVID-19 restrictions eased. This strengthened hopes of a consumer-driven recovery in Germany, Europe’s largest economy over the summer.
Andrew Harker, Economics Director at IHS Markit said that the ramping up of activity is proving to be good news for workers, with companies taking on extra staff at an unprecedented rate.
He said that inflationary pressures remain elevated, however, and companies will take little solace from the fact that costs rose at a slightly weaker pace than in June. He also added that with the sector running hot and severe pressure on capacity signalled, rising costs look set to remain a feature in the near term at least.
Euro Zone Business Surged in July
Euro zone business activity surged last month, expanding at its fastest pace in 15 years. Survey showed that the lifting of more coronavirus restrictions and an accelerated vaccine drive brightened the bloc’s service industry.
Supply chain disruptions and labour shortages, however, showed that input prices surged at the fastest rate in over two decades. Moreover, worries about further curbs in relation to the Delta variant of COVID-19 hurt optimism.
Chris Williamson, chief business economist at IHS Markit said that Europe’s service sector is springing back into life. He also said that easing virus restrictions and further vaccination progress are boosting demand for a wide variety of activities, especially in tourism, travel and hospitality.
Manufacturing activity continued to expand at a blistering pace in July, according to a survey on Monday. However, widespread shortages of materials and poor transport availability pushed the factory input prices index to its highest since June 1997.
Also felt by services firms were inflationary pressures and the composite input price index ticked up to 69.9 from 69.8, its highest in nearly 21 years.