EU Zone Sees Business Activity Shrink—Again

EU Zone Sees Business Activity Shrink—Again

Photo: Alex Guibord

Preliminary data released on Friday indicates that economic activity in the euro zone shrunk in October as a second wave of covid swept across the region.

The flash euro zone PMI composite output index has dipped to 49.4 versus 50.4 in September. A reading of manufacturing and services sectors activity below 50 represents a contraction and October’s figure represents a four-month low.

A breakdown shows that the services sectors activity has hit a five-month low while manufacturing has remained stable over the last month.

“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 in October,” Chris Williamson, chief business economist at IHS Markit, revealed in a statement to CNBC.

He also stated that the data “revealed a tale of two economies, with manufacturers enjoying the fastest growth since early-2018...but intensifying Covid-19 restrictions took an increasing toll on the services sector.”

Yesterday France, whose composite output index plummeted to a five-month low of 47.3 in October compared to 48.5 in September, announced an extended curfew which will impact two-thirds of the country. From midnight Friday, 46 million people will face a 6-week curfew from 9 p.m. to 6 a.m. and all bars, casinos, gyms, fairs, and bistros will have to close until December 5.

Restaurants, following strict health measures, will be allowed to stay open until 9 p.m.

FURTHER READING
Here We Go Again: Alpes-Maritimes Heads Into 6-Week Curfew. Is Monaco Next?