According to the report from IHS Markit, eurozone business activity continued to grow at one of the strongest rates seen over the past two decades in August, the rate of expansion cooling only slightly despite widespread supply chain delays. Service sector growth exceeded that of manufacturing for the first time since the pandemic, buoyed by the further reopening of the economy. Firms’ costs and prices charged meanwhile again rose at some of the fastest rates seen over the past 20 years as demand again outstripped supply. While business confidence was subdued by rising concerns over the Delta variant, hiring remained the strongest for 21 years as firms boosted capacity to meet rising demand.

The headline Eurozone Composite PMI fell from a 15-year high of 60.2 in July to 59.5 in August. The latest figure matched that seen in June to register the joint-second-fastest expansion seen since 2006. Growth in the service sector overtook that of manufacturing for the first time in the recovery from the pandemic as COVID-19 containment measures were eased further during the month to the lowest since the start of the pandemic. Growth in the service sector was marginally slower than July’s 15- year high, however, as some firms came under pressure from the recent rise in COVID-19 cases. Manufacturing output also continued to grow at a pace rarely exceeded in the survey history as a result of the ongoing recovery of demand from the depths of the pandemic, though the rate of expansion moderated for a second month to the weakest since February.