The eurozone’s economic recovery from its deepest downturn on record has stuttered this month, particularly in services, as the pent-up demand unleashed last month by an easing of COVID-19 lockdowns dwindled, a survey showed yesterday.
To contain the spread of the virus, governments imposed strict lockdowns — forcing businesses to close and citizens to stay home, bringing economic activity to a near halt.
After many of those restrictions were relaxed, activity in the eurozone last month expanded at the fastest pace since the middle of 2018, but as infection rates have risen again in parts of the region, some earlier curbs have been reinstated.
Photo: Bloomberg
IHS Markit’s flash Composite Purchasing Managers’ Index, seen as a good gauge of economic health, sank to 51.6 from last month’s final reading of 54.9.
While still above the 50-mark separating growth from contraction, it was below all forecasts in a Reuters poll that had predicted no change from last month.
“The eurozone’s rebound lost momentum in August, highlighting the inherent demand weakness caused by the COVID-19 pandemic,” IHS Markit economics director Andrew Harker said. “The recovery was undermined by signs of rising virus cases in various parts of the euro area.”
An index measuring new business dropped to 51.4 from 52.7 and once again some of this month’s activity was derived by businesses completing backlogs of work.
Growth in the bloc’s dominant service sector stalled — its PMI plummeted to 50.1 from 54.7, below all forecasts in the Reuters poll that predicted a small dip to 54.5.
With demand waning, services firms cut headcount for a sixth month and more sharply than last month, with the employment index falling to 47.7 from 47.9.
Factory activity — which did not experience quite as sharp a decline as the service industry during the height of the pandemic — expanded for a second month.
The manufacturing PMI dipped to 51.7 from 51.8, confounding the Reuters poll forecast for a rise to 52.9.
An index measuring output, which feeds into the composite PMI, rose to 55.7 from 55.3.
Factory purchasing managers bought fewer raw materials, indicating that they do not expect a big pickup in activity.
The quantity of purchases index only rose to 49.6 from 48.3.
A full bounce back from the eurozone’s deepest recession on record would take two years or more, a Reuters poll of economists published on Thursday showed.
“The eurozone stands at a crossroads, with growth either set to pick back up in the coming months or continue to falter following the initial post-lockdown rebound,” Harker said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
STRUGGLING TO SURVIVE: The group is proposing a consortium of investors, with Tesla as the largest backer, and possibly a minority investment by Hon Hai Precision Nissan Motor Co shares jumped after the Financial Times reported that a high-level Japanese group has drawn up plans to seek investment from Elon Musk’s Tesla Inc to aid the struggling automaker. The group believes the electric vehicle (EV) maker is interested in acquiring Nissan’s plants in the US, the newspaper reported, citing people it did not identify. The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Hon Hai Precision Industry Co (鴻海精密) to prevent a full takeover by the Apple supplier, the report said. The group is
RSS