Business growth throughout the European Union accelerated at its fastest pace in more than three years in May due to a resurgence in the service and manufacturing sectors.
With more businesses reopening, IHS Markit’s Composite Purchasing Managers’ Index (PMI), seen as a bellwether of economic health, climbed to 56.9 from April’s final reading of 53.8.
That was the PMI’s highest level since February 2018 and comfortably above the 50-mark that separates growth from contraction, as well as the more modest increase to 55.1 that had been expected by analysts.
A deal agreed to by the European Union to open tourism across the 27-nation bloc this summer could provide a boost to tourism-dependent economies that were hammered by pandemic restrictions last year.
In Germany, Europe’s largest economy, services activity has risen by the most in nearly a year during May, helped by a loosening of restrictions. The lifting of a lockdown in France unleashed a business boom there, with activity surging past expectations to set the stage for a strong economic rebound.
Meanwhile, in Britain, which is now outside the European Union and its common currency zone, the PMI hit a record high. Many services firms reopened their doors and factories rode a wave of demand from a recovering global economy, prompting a jump in both hiring and prices.
Data also showed British retail sales surged in April, with shoppers spending on new clothes as they were allowed out to socialize after shops reopened following months of pandemic lockdowns.
Europe’s manufacturing industry has weathered the global pandemic much better than services as factories largely remained open. Manufacturing’s PMI dipped from April’s record high of 62.9 to 62.8 but was well ahead of the 62.5 that was expected by analysts.