Growth in the eurozone services sector hit a three-year high in May as Covid-related restrictions eased, according to a survey released on Thursday.
IHS Markit’s eurozone services purchasing managers’ index rose to 55.2 from 50.5 in April, coming in just above the flash estimate of 55.1. This marked the third successive month of expansion and the best level recorded since February 2018.
A reading above 50.0 indicates expansion while a reading below signals contractions.
The survey showed that Ireland and Spain saw the fastest growth in the sector, while Germany recorded the slowest expansion.
The composite output index for the bloc, which includes manufacturing, printed at 57.1 in May from 53.8 in April and versus a flash estimate of 56.9.
Chris Williamson, chief business economist at IHS Markit, said: “The eurozone’s vast service sector sprang back into life in May, commencing a solid recovery that looks likely to be sustained throughout the summer.
“Businesses reported the strongest surge in demand since the start of 2018 as covid restrictions were eased and vaccine progress boosted confidence. After covid fighting measures were tightened to the harshest for a year in April, restrictions eased considerably in May on average. These measures are on course to moderate further at least until the autumn, assuming further significant covid waves are avoided. This should facilitate the further return to more normal business conditions as the summer proceeds.
“Business optimism for the year ahead has consequently hit the highest for over 17 years.”
Capital Economics said the PMIs are consistent with the eurozone’s economic recovery gathering pace in May.
“Price pressures in the manufacturing sector are intensifying, but we still think that higher inflation will be temporary,” it added.