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Social distancing to restrain rebound in euro area services, IHS Markit says

By Alexander Bueso

Date: Wednesday 05 Aug 2020

Social distancing to restrain rebound in euro area services, IHS Markit says

(Sharecast News) - Services sector activity in the single currency bloc accelerated sharply from depressed levels last month as lockdown restrictions were eased, the results of a closely-watched survey revealed.
But revised figures revealed that the speed of the rebound was a tad less than initially thought.

IHS Markit's services sector Purchasing Managers' Index printed at 54.7 for July, up from 48.3 in the month before (Preliminary: 55.1).

The composite output index meanwhile came in at 54.9, against 48.5 for July (Preliminary: 54.8), but only due to the faster than expected recovery in factory output during the same month.

It was the first reading above 50.0 points - the threshhold between expansion and contraction in the sector - for the composite index since February and the first above that level for the services PMI in five months.

Chris Williamson, chief business economist at IHS Markit, said that Wednesday's readings bode well for a rebound in third quarter activity levels.

But he added: "However, even without a significant increase in infections, social distancing measures will need to be in place until an effective treatment or vaccine is available, dampening the ability of many firms to operate at anything like pre-pandemic capacity, and representing a major constraint on longer-run economic recovery prospects."

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