Eurozone business slump eases as lockdowns relaxed
UK ECONOMY WEAKENS AT A SLOWER PACE WITH BUSINESSES REOPENING
The plunge in Eurozone business activity caused by lockdowns imposed to stop the spread of the coronavirus eased sharply last month as more businesses reopened and people ventured out, a survey showed yesterday.
IHS Markit’s final Composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, bounced to 48.5 in June from May’s 31.9. That was better than a 47.5 preliminary reading and close to the 50-mark separating growth from contraction.
“The upturn signals a remarkably swift turnaround in the Eurozone economy’s plight amid the COVID-19 pandemic,” said Chris Williamson, chief business economist at IHS Markit.
“An improvement in business sentiment meanwhile adds to hopes that GDP growth will resume in the third quarter.” A June Reuters poll predicted that the economy contracted an unprecedented 12.5 per cent last quarter but would grow 7.9 per cent this quarter.
Activity in the bloc’s dominant service industry also almost returned to growth last month. Its PMI soared to 48.3 from 30.5, comfortably ahead of the 47.3 flash reading.
UK slowdown eases
In the UK, the IHS Markit’s composite Purchasing Managers Index climbed to 47.7 from 30 in May. That’s slightly better than the flash estimate, but still below the 50 mark that separates expansion from contraction.
The question now is how long it will take for output to return to pre-crisis levels. Bank of England Chief Economist
Andy Haldane said this week that the economy is faring better than policymakers expected, though the outlook for jobs remains fragile.
“Encouragingly, more than one in four service providers reported an expansion of new business during June, which was commonly attributed to pent-up demand,” said Tim Moore, economics director at Markit.
Bank of England Chief Economist Andy Haldane said this week that the economy is faring better than policymakers expected.