Euro zone PMI August 2021: coronavirus, summer travel

LONDON – The eurozone economy lost momentum in August, but is still on track for solid growth in the third quarter of this year, preliminary data showed on Monday.

IHS Markit’s flash composite euro area PMI, which examines activity in manufacturing and services, hit a two-month low of 59.5 in August from 60.2 in July. A reading above 50 represents an expansion in economic activity.

“The encouragement comes from a second month of job creation at the highest in 21 years, which reflects the efforts of companies to increase their operating capacity and meet demand, which should ultimately help further reduce jobs. price pressures, ”Chris Williamson, chief economist at IHS Markit, said in a statement.

The latest data on business activity comes as many consumers in the region take advantage of the lifting of Covid-related restrictions, which has boosted economic recovery from the pandemic.

Growth estimates last month showed the eurozone had recovered from a technical recession (defined as two consecutive quarters of economic contraction) by increasing 2% in the second quarter of this year.

These data releases are important as the European Central Bank is due to meet next month and some of its members are pushing for talks on cutting some of the ongoing stimulus measures.

In this context, however, there are concerns about supply chain issues and higher inflation.

“The problem is that we are seeing an upward movement in wage growth due to the labor market gain, which could translate into higher inflation, and supply delays from Asia in particular. seem likely to persist for a while, ”said Williamson. also said.

French companies did not escape the slowdown in dynamics in August.

The country’s flash composite PMI index slipped to 55.9 in August from 56.6 in July, a 4-month low. However, the data still points to solid growth in the third quarter of the year.

“Despite some of the challenges companies face on the supply side, it is encouraging to see PMI data consistently signaling robust expansion,” Joe Hayes, senior economist at IHS Markit, said in a statement.

He added: “Given that we are now halfway through the third quarter, survey data so far suggests that we might see another decent result in the corresponding GDP figure.”

In Germany, where federal elections are scheduled for next month, economic activity also fell to its lowest level in two months.

The flash composite index for Germany stood at 60.6 in August, down from 62.4 in July.

“Although growth has slowed since July, data still points to stronger economic expansion in the third quarter than the interim 1.5% increase in GDP seen in the three months to June,” said Phil Smith, director partner of IHS Markit. in a report.

However, he added that “many manufacturers remain inhibited by a shortage of materials and components and supply delays, which will likely remain constraining factors for months to come.”