Eurozone Private Sector Expands At Fastest Pace Since 2006

The euro area private sector grew at the fastest rate in 15 years in June as the economy re-opened further from virus-fighting restrictions, flash survey data from IHS Markit showed on Wednesday.

At 59.2, the flash composite output index reached its highest level since June 2006, up from 57.1 in May. The reading was also above economists’ forecast of 58.8.

Manufacturing continued to lead the upturn, reporting a twelfth successive month of output. Nonetheless, it was the service sector that again reported the biggest improvement in performance.

The services Purchasing Managers’ Index advanced to a 41-month high of 58.0 in June from 55.2 in the previous month.

At the same time, the manufacturing PMI held steady at 63.1 in June, while it was forecast to fall to 62.1.

“The data set the scene for an impressive expansion of GDP in the second quarter to be followed by even stronger growth in the third quarter,” Chris Williamson, chief business economist at IHS Markit said.

A further improvement in demand was also reported in June as new order growth likewise accelerated to the fastest since June 2006.

Business confidence in the outlook improved to the highest since future sentiment data were first available in 2012.

The renewed surge in demand and brightening outlook prompted firms to take on additional staff for a fifth straight month, boosting employment numbers to the greatest extent since August 2018.

Average input prices rose at a rate exceeded only once over the 23-year survey history. Average prices charged for goods and services meanwhile rose at by far the fastest pace since comparable data began in 2002.

Germany’s private sector grew at the fastest pace in more than a decade in June. The composite output index climbed to a 123-month high of 60.4 from 56.2 in the previous month.

The upturn reflected improved performances across both monitored sectors. In services, business activity rose at the quickest for more than ten years. The corresponding Purchasing Managers’ Index came in at 58.1, up from 52.8 a month ago.

The manufacturing PMI rose moderately to 64.9 in June from 64.4 in the prior month, while the index was forecast to fall more sharply to 63.0.

France’s private sector grew at the fastest pace in almost a year in June. The composite output index rose marginally to 57.1 in June from 57.0 in May but the index remained below economists’ forecast of 59.0.

Nonetheless, this was the highest score since last July as the easing of lockdown restrictions helped drive the sharpest rise in service sector activity since April 2018.

The services PMI advanced to 57.4 from 56.6 a month ago. However, the reading was below the expected level of 59.4.

The manufacturing PMI fell more-than-expected to 58.6 from 59.4 in the previous month. The expected reading was 59.0.

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