Eurozone company growth near 15-year high despite supply chain

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Is the post-pandemic growth rebound running out of steam this month, as the Delta variant hits economies around the world?

New economic data from Australia and Japan this morning show that activity slowed in August, ahead of a healthcheck on companies in the UK, the eurozone and the US.

In Australia, private sector output is shrinking at a faster rate this month as the recent lockdowns introduced in parts of the country bite.

A ‘flash’ survey of purchasing managers across the country show that the service sector contracted more sharply, as the pandemic continued to dampen demand and output. Some firms were forced to cut staff, as cases hit record levels.

This pulled the IHS Markit Flash Australia Composite Output Index down to a 15-month low of 43.5 in August, from 45.2 in July [any reading below 50 shows a contraction].

This shows the “continued toll that the Delta COVID-19 wave is taking on Australia’s private sector economy”, Markit says.

Jingyi Pan, economics associate director at IHS Markit, said:

“Australia’s private sector remained stuck in decline in August, according to the latest IHS Markit Flash Australia Composite PMI data, as activity remained heavily impacted by current mobility restrictions brought about by the spread of the COVID-19 Delta variant.

Not only were demand and business activity hit, employment conditions also deteriorated, with private sector staffing levels falling for the first time since October 2020. The labour market situation had been made worse on both ends of supply and demand amid the latest COVID-19 disruptions.

But firms are a little more optimistic, Pan adds:

“The one bright spot had been an improvement in the outlook amongst Australian private sector firms in August, with hopes of an improvement in the COVID-19 situation expected to spark an eventual rebound for the Australian economy.”

It’s a similar picture in Japan, where factory activity growth slowed in August, while that of the services sector shrank at the fastest pace since May 2020.

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