Economic growth in the eurozone jumped sharply in February as coronavirus restrictions were eased, a key survey showed on Monday.
Growth accelerated to a five-month high, IHS Markit said in its closely watched monthly survey — but it also noted that persistent supply constraints and soaring energy prices also pushed inflation to a record level.
Its purchase managers’ index (PMI) surged 3.5 points to 55.8, higher than the 52.3 recorded in January. A figure above 50 indicates growth.
The rise was attributed to the eurozone — the 19 EU countries using the euro — exiting two months of tough restrictions designed to slow the spread of the Omicron variant.
Omicron is now the dominant strain in Europe, but governments regard it as less grave than previous variants because widespread vaccinations and booster jabs have muted its impact.
After two months of curbs that hit the eurozone economy, “February saw these restrictions ease to the lowest since November,” IHS Markit said.
The service sector led the newfound optimism, as increased travel and tourism pushed it to its highest level since last November.
Manufacturing increased “also accelerated slightly, attaining the fastest expansion since last September, thanks in part to improved supply availability” and a rise in demand.
However, supply constraints remained, causing backlogs, and average prices for goods and services spiked to the highest level recorded in the PMI surveys.
“Soaring energy costs and rising wages have added to inflationary pressures, resulting in the largest rise in selling prices yet recorded in a quarter of a century of survey data history,” said IHS Markit’s chief economist, Chris Williamson.
“The intensification of inflationary pressures will add to speculation of an increasing hawkish stance” at the European Central Bank, he said.
The survey showed that growth in the eurozone’s powerhouse Germany was at a six-month high, with an index reading of 56.2.
The second-biggest economy, France, was doing even better, with growth at an eight-month high and an index reading of 57.4.