European data: The service sector in the effect of contraction

PMI data from Europe showed that the growth position in the manufacturing sector continued, whereas recession concerns due to shutdowns in the service sector increased.

PMI data from Europe showed that the growth position in the manufacturing sector continued, whereas recession concerns due to shutdowns in the service sector increased. Although the manufacturing PMI slowed down in Germany to the level of 57, it is seen that the contraction in the service sector with 46.8 in January, deepened a little. Virus-induced shutdowns in France indicate a faster decline in the service sector; From 49.1 to 46.5. The service sector PMI of the general Euro Zone has decreased to 45.

 

Although the manufacturing sector is not in this contraction, the difficulties of European producers in finding suppliers and increasing costs pose a lower risk. The disruptions caused by the worldwide epidemic and the changes in trade caused by factors such as Brexit stand out as the reasons for this change in supplies.

 

After the meeting of the European Central Bank that the monetary expansion position did not change, Lagarde acknowledged that the economic risks were downside and said that monetary incentives should continue. Although the intense effects of the epidemic are expected to be felt intensely in 1Q21 due to quarantine measures, expectations are more positive in the medium term due to vaccination. If vaccination has the epidemic under control, it will allow further opening in terms of economic activity. This is especially important in terms of the activation of the service sector, which is experiencing a sharp contraction.

 

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