According to the report from IHS Markit, eurozone business activity grew at the fastest rate for 15 years in June as the economy re opened further from virus-fighting restrictions and vaccine progress boosted confidence. Prices charged for goods and services rose at an unprecedented rate, however, as demand continued to outstrip supply. Despite firms taking on extra staff at the sharpest rate for almost three years, June saw a record rise in backlogs of work, a further near-record lengthening of supply chains and the increasingly widespread depletion of warehouse inventories.

The headline Eurozone Composite PMI increased from 57.1 in May to 59.2 in June, its highest since June 2006. The latest reading indicated a third successive month of accelerating output growth as the economy continued to open up from COVID-19 related restrictions. A further improvement in demand was also recorded, as new order growth likewise accelerated to the fastest since June 2006.

Business confidence in the outlook meanwhile rose to the highest since future sentiment data were first available in 2012, buoyed by the recent surge in demand and prospects of the economy opening up further in coming months.

Manufacturing continued to lead the upturn, reporting a twelfth successive month of output growth with the rate of expansion picking up again, albeit remaining slightly below March’s record high. Production growth was again sharpest in Germany, with France lagging the rest of the region amid a slower rate of new order growth.

Although manufacturing reported the stronger pace of growth, it was the service sector that again reported the biggest improvement in performance, with business activity growth accelerating to a pace not exceeded since July 2007.