Euro zone business activity slipped slightly in August but was still on track to produce a strong third quarter, according to an IHS Markit survey published on Monday.
The survey’s Flash Composite Purchasing Managers’ Index, seen as a good guide to economic health, fell to 59.5 in August from 60.2 last month. A figure above 50 indicates growth.
The slight fall was attributed to supply chain disruptions and fears the Delta variant of Covid-19 could lead to renewed restrictions.
“The euro zone’s economic recovery retained impressive momentum in August, with the PMI dipping only slightly from July’s recent high to put its average in the third quarter so far at the highest for 21 years,” said Chris Williamson, chief business economist at IHS Markit.
“Supply chain delays continue to wreak havoc, however, leaving companies frequently unable to meet demand and pushing firms’ costs higher.”
“Encouragement comes from a second month of job creation at the strongest for 21 years, which reflects efforts by firms to boost operating capacity and meet demand, which should ultimately further help bring price pressures down,”
Firms increased headcount at a near record pace but were still unable to complete all new business coming in, building up a backlog of work at the third fastest pace in survey history. The composite employment index held at 56.1.
A PMI covering the bloc’s dominant service industry nudged down to 59.7 from July’s 15-year high of 59.8.
The manufacturing PMI came in at 61.5, below July’s 62.8 and estimates of 62.0.
