​Eurozone business growth accelerating at its fastest pace in more than three years

Eurozone business growth accelerated at its fastest pace in over three years in May, as a strong resurgence in the bloc’s reopening service industry added to the impetus from an already-booming manufacturing sector, Reuters has reported, citing a survey published on Friday.

The decision to relax some restrictions imposed to quell the spread of the coronavirus, and a deal agreed by the European Union on Thursday to open up tourism across the 27-nation bloc this summer should provide a boost to tourism-dependent economies hit hard last year.

With more businesses reopening - or at least adapting to lockdowns - IHS Markit's flash Composite Purchasing Managers' Index, seen as a good guide to economic health, climbed to 56.9 from April's final reading of 53.8.

That was its highest level since February 2018 and comfortably above the 50 mark separating growth from contraction, as well as the more modest increase to 55.1 predicted in a Reuters poll.

The bloc's economy will expand 1.4% this quarter, according to a Reuters poll last week that also found forecasts for the rest of the year had been downgraded from last month.

"May's increase in the euro zone Composite PMI reflects the further lifting of virus restrictions in many parts of the region and suggests that the economic recovery is now underway," said Jessica Hinds at Capital Economics.

In Germany, Europe's largest economy, services activity rose by the most in nearly a year, helped by a loosening of restrictions. But supply bottlenecks in manufacturing led to production problems at a growing number of factories.

The lifting of a lockdown in France unleashed a business boom there, with activity surging past expectations to set the stage for an economic rebound.

In Britain, outside the European Union and its common currency area, the flash composite 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 on Friday also showed British retail sales surged in April,with shoppers splashing out on new clothes as they were allowed out to socialise after shops reopened following months of lockdown closures.

"April was always likely to see a further surge in sales as stores reopened for the first time in months - with fashion retailers the ultimate beneficiaries of beer gardens reopening and the 'rule of six' night out returning," said Aled Patchett at Lloyds Bank.

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