Euro-Area Services Beat Industry Output First Time Since Crisis
Growth in the euro area’s service sector is exceeding that in manufacturing for the first time since the pandemic crisis took hold last year, underscoring the difficulty industry faces amid supply shortages.
Surveys of purchasing managers by IHS Markit showed manufacturers struggled to keep up with demand in August, causing their rate of expansion to moderate. Momentum in services remained near a 15-year high, underpinned by loser coronavirus curbs.
The figures signal a strong recovery in the region, even as risks to the outlook remain high. Coronavirus infections are on the rise again and bottlenecks are pushing up costs for companies and consumers, with prices rising at some of the fastest rates in two decades.
“Although the spread of the Delta variant caused widespread problems across the region, curbing demand and causing further supply issues, firms benefited from virus containment measures easing to the lowest since the pandemic began,” said IHS Markit economist Chris Williamson. “Supply chain delays continue to wreak havoc, however, leaving companies frequently unable to meet demand and pushing firms’ costs higher.
Supply shortages are particularly grave in Germany, where a poll showed last week that most companies don’t expect an improvement this year.
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