The euro area private sector expanded at the fastest pace in 21 years in July, as the member countries eased COVID-19 restrictions, flash survey results from IHS Markit showed on Friday.
At 60.6, the composite output index hit a 252-month high in July, up from 59.5 in June and economists' forecast of 60.0.
The services activity grew the most in 15 years, while growth in manufacturing moderated to a four-month low due to worsening supply lines.
The services sector in particular is enjoying the freedom of loosened COVID-19 containment measures and improved vaccination rates, especially in relation to hospitality, travel and tourism, Chris Williamson, chief business economist at IHS Markit said.
The services Purchasing Managers' Index advanced to 60.4 from 58.3 in June. The score was forecast to climb to 59.5.
On the other hand, the factory PMI dropped to 62.6 from 63.4 in the previous month. The reading was expected to fall to consensus 62.5.
New orders across both the manufacturing and services accelerated to the fastest since May 2000. Backlogs of work rose at a joint-survey record rate amid capacity constraints.
Firms hired additional staff for a sixth straight month to meet the upturn in demand. The net increase was the second-steepest since January 2018.
Prices charged for goods and services rose at a pace unseen prior to June as demand again outstripped supply.
Meanwhile, business confidence took a hit from rising concerns over the delta variant, pushing sentiment for the year ahead to a five-month low.
Within the Eurozone, Germany led the upturn, reporting the strongest monthly expansion since comparable data were first available in January 1998. Meanwhile, the rate of expansion moderated to a three-month low in France.
Germany's private sector growth was driven by an ongoing rapid recovery in services activity. The composite output index rose to 62.5 in July from 60.1 in June. The latest score was above economists' forecast of 60.8.
The services PMI advanced to a record 62.2 from 57.5 in the previous month. The reading was expected to rise moderately to 59.1.
The manufacturing PMI came in at a three -month high of 65.6, up from 65.1 a month ago and economists' forecast of 64.2.
France's private sector remained strong in July but the pace of expansion moderated from June. The flash composite output index dropped unexpectedly to 56.8 in July from 57.4 in June. The score was forecast to rise to 58.5.
Service sector output growth continued to surpass that seen in the manufacturing sector amid looser lockdown restrictions.
The manufacturing PMI fell more-than-expected to 58.1 from 59.0 in June. The expected score was 58.4. At the same time, the services PMI came in at 57.0, down from 57.8 in June and the forecast of 58.7.