Delta fears send eurozone confidence to five-month low

BUSINESS confidence across the eurozone plunged to a five-month low as fears grow over the delta variant.

Expectations for output fell as concerns about the virus spread across the continent, with France – where cases are soaring – taking the hardest hit.

The drop put a dampener on soaring activity, with the bloc-wide purchasing managers’ index reading hitting a 21-year high amid reopenings.

Services sector activity saw the fastest rise in 15 years, but supply chain disruptions slowed growth in the manufacturing sector.

Chris Williamson, chief business economist at IHS Markit, which gathered the data, said “further Covid waves around the world could lead to further global supply chain delays and hence ever-higher prices”.

Prices for goods and services rose at a near-record pace, outstripped only by June’s rise. Companies blamed continued problems getting hold of goods that were leaving them unable to fulfil orders. Delivery times, already near a record high, continued to rise.

The flash composite PMI reading – in which a reading above 50 indicates growth compared with the prior month – came in at 60.6, the strongest since June 2000. The gains were driven primarily by Germany, with the pace of expansion in France slowing slightly as Emmanuel Macron, the president, struggles to manage its latest wave.

The price increases will add to fears over rising inflation. The shift has put pressure on the ECB, which has resisted calls for the eurozone’s monetary hawks to rein in stimulus. Christine Lagarde, ECB president, has defied Berlin, throwing her support behind a lower-forlonger plan that will preserve ultra-loose monetary conditions.