Eurozone economy’s recovery stumbles as coronavirus cases rise
The Eurozone economy’s recovery from coronavirus lost steam in August, according to new survey data, as demand in the bloc’s all-important services sectors slowed.
The IHS Markit composite purchasing managers’ index (PMI) – a closely watched gauge of economic health – dropped to a two-month low of 51.6 in August from 54.9 in July, according to an early estimate.
As a score above 50 indicates expansion, the economy continued to grow. But the rate of growth slowed considerably as coronavirus cases rose in various countries.
Andrew Harker, economics director at data firm IHS Markit, said the weak data highlighted “the inherent demand weakness caused by the Covid-19 pandemic”.
“The recovery was undermined by signs of rising virus cases in various parts of the euro area.”
Private-sector growth had rebounded sharply in June and July after Eurozone countries lifted their coronavirus lockdowns. However, cases began to rise again in July and August, causing some countries to reinstate restrictions.
Cases are still rising quickly in many countries, raising the prospect of further difficulty for the Eurozone economy.
France reported 4,770 new cases on Thursday, the highest since mid-April. Germany recorded more than 1,500 in the 24 hours through to Friday morning.
IHS Markit said August’s unexpected slowdown in growth – economists had predicted a PMI score of 54.9 – was solely driven by the services sector.
Manufacturing output rose to a 28-month high, it said. By comparison, service providers said business activity was broadly unchanged from July.
Firms cut staffing levels for the sixth month in a row as business confidence fell. IHS Markit said both manufacturing and services firms cut jobs overall.