Eurozone recovery from record downturn falters as economies diverge
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London — The eurozone's recovery from its deepest economic downturn on record faltered in August, surveys showed on Thursday, with some countries in the bloc suffering more than others from restrictions imposed to limit the spread of the coronavirus.
Overall growth in the dominant service industry — which has been harder hit than manufacturing from lockdown measures — almost ground to a halt, suggesting the long road to recovery will be bumpy.
Last quarter the bloc's economy contracted 12.1% as lockdowns led to businesses being shuttered and citizens staying home, official data showed.
But as infection numbers have risen some restrictions have been re-imposed, and IHS Markit's final Composite Purchasing Managers' Index, seen as a good gauge of economic health, suggested the economy was still floundering.
It sank to 51.9 in August from July's 54.9 — close to the 50 mark separating growth from contraction, albeit slightly better than an initial flash reading of 51.6. The services PMI fell to 50.5 from 54.7, better than its flash reading of 50.1.
"The recovery is already cooling down a little bit and it is very uneven among countries. Some countries like Germany have performed relatively well and other countries like Spain and to a lesser extent France are sending more worrying signs," said Daniela Ordonez at Oxford Economics.
While Germany's services PMI fell, it nevertheless remained relatively healthy. French business activity growth also eased, with new orders stagnating as the euro zone's second-biggest economy battled the disruption to trade caused by the pandemic.
On Thursday, the French government detailed its €100bn stimulus plan to erase the economic impact of the coronavirus crisis over two years, lining up billions of euros in public investments, subsidies and tax cuts.
Meanwhile the services PMIs for Italy and Spain, both of which rely heavily on tourism, dropped back below the breakeven mark as travel restrictions put in place by many European countries have hit the summer season.
Greece's economy, also largely reliant on tourism, contracted 14% last quarter, official data showed on Thursday.
In Britain, outside the currency union, the composite PMI was at a six-year high but job losses accelerated in a bleak sign ahead of the closure of the UK government's coronavirus furlough scheme at the end of next month.
Weak demand
Demand stuttered across the currency union, despite firms cutting prices, and headcount was reduced for a sixth month.
Inflation turned negative in ...
Overall growth in the dominant service industry — which has been harder hit than manufacturing from lockdown measures — almost ground to a halt, suggesting the long road to recovery will be bumpy.
Last quarter the bloc's economy contracted 12.1% as lockdowns led to businesses being shuttered and citizens staying home, official data showed.
But as infection numbers have risen some restrictions have been re-imposed, and IHS Markit's final Composite Purchasing Managers' Index, seen as a good gauge of economic health, suggested the economy was still floundering.
It sank to 51.9 in August from July's 54.9 — close to the 50 mark separating growth from contraction, albeit slightly better than an initial flash reading of 51.6. The services PMI fell to 50.5 from 54.7, better than its flash reading of 50.1.
"The recovery is already cooling down a little bit and it is very uneven among countries. Some countries like Germany have performed relatively well and other countries like Spain and to a lesser extent France are sending more worrying signs," said Daniela Ordonez at Oxford Economics.
While Germany's services PMI fell, it nevertheless remained relatively healthy. French business activity growth also eased, with new orders stagnating as the euro zone's second-biggest economy battled the disruption to trade caused by the pandemic.
On Thursday, the French government detailed its €100bn stimulus plan to erase the economic impact of the coronavirus crisis over two years, lining up billions of euros in public investments, subsidies and tax cuts.
Meanwhile the services PMIs for Italy and Spain, both of which rely heavily on tourism, dropped back below the breakeven mark as travel restrictions put in place by many European countries have hit the summer season.
Greece's economy, also largely reliant on tourism, contracted 14% last quarter, official data showed on Thursday.
In Britain, outside the currency union, the composite PMI was at a six-year high but job losses accelerated in a bleak sign ahead of the closure of the UK government's coronavirus furlough scheme at the end of next month.
Weak demand
Demand stuttered across the currency union, despite firms cutting prices, and headcount was reduced for a sixth month.
Inflation turned negative in ...