LONDON, Aug 4 - Euro zone business activity exploded in July, expanding at its fastest pace in 15 years, as the lifting of more coronavirus restrictions and an accelerated vaccine drive injected life into the bloc's dominant service industry, a survey showed.
However, supply chain disruptions and labour shortages meant input prices collapsed at the fastest rate in two decades and fears of further curbs to contain the more infectious Delta variant of COVID -19 dented optimism.
IHS Markit's final composite Purchasing Managers Index seen as a good gauge of economic health, climbed to 60.2 from June 59.5, its highest level since June 2006, well above the 50 mark separating growth from contraction, though slightly below a 60.6 flash estimate.
With more of the service industry closing, the sector PMI Index rose to its highest final reading since June 2006.
Across the bloc, the services PMIs remain comfortably in expansionary territory as the services sector benefits from easing restrictions, said Katharina Koenz of Oxford Economics.
Services activity in Germany, the largest economy of Europe, increased at a record pace. In France, the bloc's second biggest economy, growth remained elevated but dipped slightly more than originally thought.
Spain's services sector grew in July at its fastest rate for 14 years; however, though August's growth was off June's highs it remained strong.
In the UK, which is outside the euro zone and the European Union, supply-chain bottlenecks and low worker absences were high in Britain prompted by COVID - 19 isolation requirements.
Manufacturing activity continued to expand at a blistering pace last month, a sister survey show on Monday, but widespread shortages of materials and poor transport availability pushed the factory input prices index to its highest reading since the survey began in June 1997.
Inflationary pressures were also felt by service firms and the composite input price index climbed to its highest in almost 21 years.
Reuters poll last month indicated that the biggest risk to the bloc's economic outlook was new COVID- 19 variants and, with Delta strain spreading across Europe, the services business expectations index fell to a three-month low.
The upside risk to the outlook horizon in 2021 remain. In the services industry, it will be pivotal to control the high vaccination speed in order to limit the spread of the already prevalent Delta variant.