Europe’s biggest economies keep growing amid pandemic reopening

Bloomberg

Europe’s two largest economies kept growing in May as they benefited from a sustained rebound in services that offset fallout from Russia’s invasion of Ukraine.
The loosening of Covid-19 restrictions in Germany and France supported activity in both countries while factories suffered from surging prices and strained supply chains, according to business surveys by S&P Global.
“A post-lockdown recovery in the services activity continues to provide a strong tailwind for the German economy,” said S&P Global economist Phil Smith. The outlook remains subdued however, “with heightened uncertainty, sharply rising prices and the supply chain disruption all starting to impact demand and representing risks to the outlook in the goods-producing sector in particular.”
The mix of issues confronting the world economy has led to worries over stagflation, a scenario that presents particular challenges for policy makers. The data suggests that services are still providing enough support to avoid that outcome for now. Growth even accelerated slightly from the previous month in Germany. It cooled in France while remaining well in the territory signalling an expansion.
Price pressures remained strong as high costs for transport, energy and other commodities continued to work their way through the economy, S&P Global said.