Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.”
IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday.
While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said.
That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.
Inflation is proving an additional hurdle, according to IHS Markit’s chief business economist, Chris Williamson.
“With supply delays remaining close to record highs and energy prices spiking higher, upward pressure on prices has meanwhile intensified far above anything previously witnessed by the surveys,” he said. “Given the mix of supply delays, soaring costs and renewed Covid-19 worries, business optimism has sunk to the lowest since January, adding to near-term downside risks for the eurozone economy.”
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