Business activity in the eurozone shot ahead at its fastest rate in 21 years in July, a closely watched survey said on Friday, as the economy went into full throttle with loosened COVID-19 restrictions.

But the survey showed that the spread of the Delta variant was beginning to chip away at business confidence, with concern that new measures could again sow chaos in the economy.

The PMI composite index from economic data group IHS Markit said activity rose from 59.5 in June to a strong 60.6 in July, well above the 50-point level that indicates growth.

With the summer in full swing, Chris Williamson, chief economist at IHS Markit, said that tourism and hospitality sectors were especially responsible for pushing the economy to historic growth levels.

However, for manufacturers, supply chain delays remained a "major concern", hurting production and pushing costs higher.

COVID-19 Vaccine

Frequently Asked Questions

How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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This, he warned, would likely "feed through to higher consumer prices in coming months" and make itself felt in the inflation data.

Pointing to a darker days ahead, Williamson said the delta variant posed "a major risk to the outlook".

"Not only have rising case numbers led to a slide in business optimism to the lowest since February, further COVID waves around the world could lead to further global supply chain delays and hence ever higher prices."

Eurozone economy booms at fastest rate in 21 years

The PMI composite index from economic data group IHS Markit said activity rose from 59.5 in June to a strong 60.6 in July, well above the 50-point level that indicates growth.