Eurozone PMIs decline as services sector slammed by Covid outreak
By Frank Prenesti
Date: Friday 23 Oct 2020
(Sharecast News) - Euro zone economic activity fell back into decline this month as the coronavirus pandemic hammered the services sector and offset improvements in manufacturing.
IHS Markit's flash Composite Purchasing Managers' Index fell to a four-month-low of 49.4 from September's final reading of 50.4, below the 50-mark separating growth from contraction.
The service industry's PMI fell to 46.2 from 48.0, below expectations of a drop to 47.0.
"The euro zone is at increased risk of falling into a double-dip downturn as a second wave of virus infections led to a renewed fall in business activity," said IHS Markit chief economist Chris Williamson.
"The survey revealed a tale of two economies, with manufacturers enjoying the fastest growth since early-2018 as orders surged higher amid rising global demand, but intensifying COVID-19 restrictions took an increasing toll on the services sector, led by weakening demand in the hard-hit hospitality industry."
"The divergence is even starker by country. While Germany is buoyed by its manufacturing sector booming to a degree exceeded only twice in almost 25 years of survey history, the rest of the region has sunk into a deepening downturn."
There was better news on the manufacturing front, with the sector's flash PMI climbing to a 26-month high of 54.4 from 53.7.
"The prospect of a slide back into recession will exert greater pressure on the ECB to add more stimulus and for national governments to help cushion the impact of Covid-19 containment measures," Williamson said.
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