Eurozone Private Sector Expands For First Time In 5 Months

After four months of contraction, the euro area private sector expanded at the fastest pace since mid-2018 as easing of Covid-19 lockdown restrictions boosted demand and expectations, final data from IHS Markit showed Wednesday.

The IHS Markit final composite output index rose to 54.9 in July from 48.5 in June. The flash reading was 54.8.

Both the manufacturing and service sectors reported marked rates of growth in July, with manufacturing registering the slightly stronger pace of expansion.

The services Purchasing Managers’ Index advanced to 54.7 in July from 48.3 in June. But this was below the flash score of 55.1.

“Whether the recovery can be sustained will be determined first and foremost by virus case numbers, and the recent signs of a resurgence pose a particular risk to many parts of the service sector, such as travel, tourism and hospitality,” Chris Williamson, chief business economist at IHS Markit, said.

The upturn in the private sector growth was broad-based by country, and led by the region’s biggest two economies.

France registered a considerable increase in activity, with the sharpest growth for nearly two-and-a-half years. At the same time, Germany posted its best increase in activity for just under two years.

At 57.3 in July, France’s composite output index climbed to a nearly two-and-a-half years high from 51.7 in June. The score was below the flash 57.6.

The services PMI moved up to 57.3 in July from 50.7 in June. The flash score was 57.8.

Germany’s composite output index advanced to a 23-month high of 55.3 in July from 47.0 in June. The flash reading was 55.5.

Recovering from a record low seen in April, the services PMI came in at 55.6 in July versus June’s 47.3 and the preliminary reading of 56.7.

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