PMI indicators point out that recovery in Europe is losing momentum

In the Euro Zone, where we have been monitoring the effects of a deep recovery in economic activity for a few months, the sectoral PMI data for August seem to have come below expectations except for Germany manufacturing.

In the Euro Zone, where we have been monitoring the effects of a deep recovery in economic activity for a few months, the sectoral PMI data for August seem to have come below expectations except for Germany manufacturing. According to the combined data of Germany service, France data and the Eurozone, the recovery lost momentum in August. Expansion continues, albeit at a slower rate, but the fact that this expansion loses momentum as the economy approaches break-even point shows that there is still the way to reach pre-pandemic dynamics.

 

Manufacturing across the Eurozone was 51.7 in August, below the expectations of 52.9; service remained at 50.1, below expectations of 54.5, pointing to a slowdown from previous levels. The decline in overall economic activity is heavily driven by the service sector, and the direct effects of the pandemic are currently being attracted by the service sector within the framework of the increased restrictions in some places. The manufacturing sector in France has started to shrink again in August with an index value of 49, the previous index value is 52.4 and there is a serious slowdown. The current economic growth is affecting the rate at which the virus spreads. However, by not applying restrictions such as curfews as much as possible, governments will resist so that the economy not to experience a greater shutdown effect again, as much as they can.

 

After the bottom of April, we see that the continuity of optimism in the economy in the period of May, June and July is still uncertain and depends on variables such as epidemic and incentive effects. The south of Europe may remain in the more negatively affected side and dangerous zone at this point than the north.

 

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