Euro zone economic recovery loses momentum in August – PMI
LONDON, Sept 3- The euro zone’s rebound from its deepest downturn on record faltered in August as growth in the bloc’s dominant service industry almost ground to a halt, a survey showed on Thursday, suggesting the long road to recovery will be bumpy. “Service sector companies across the euro zone saw growth of business activity grind almost to a halt in August,…
LONDON, Sept 3 (Reuters) – The euro zone’s rebound from its
deepest downturn on record faltered in August as growth in the
bloc’s dominant service industry almost ground to a halt, a
survey showed on Thursday, suggesting the long road to recovery
will be bumpy.
Last quarter the bloc’s economy contracted 12.1% aslockdowns imposed to quell the spread of the novel coronavirusled to businesses being shuttered and citizens staying home,official data showed.
A Reuters poll last month predicted a bounceback thisquarter with growth of 8.1% but said a full recovery would taketwo years or more.
But IHS Markit’s final Composite Purchasing Managers’ Index,seen as a good gauge of economic health, suggested the economywas still floundering.
It sank to 51.9 last month from July’s 54.9 – close to the50 mark separating growth from contraction, albeit slightlybetter than an initial flash reading of 51.6. The services PMIfell to 50.5 from 54.7, better than its flash reading of 50.1.
“Service sector companies across the euro zone saw growth ofbusiness activity grind almost to a halt in August, fuelingworries that the post-lockdown rebound has started to fade amidongoing social distancing restrictions linked to COVID-19,” saidChris Williamson, chief business economist at IHS Markit.
“The latest reading still sends a disappointing signal thatthe rebound has lost almost all momentum.”
Demand stuttered across the currency union, despite firmscutting prices, and headcount was reduced for a sixth month.
Inflation turned negative last month for the first timesince May 2016, official data showed on Tuesday, and thecomposite output price index remained below the 50 line at 48.5.That was below a flash reading of 49.0 but above July’s 48.1.
The European Central Bank would like inflation just below 2%and has already bought record amounts of debt to keep borrowingcosts down and support the economy.
ECB Chief Economist Philip Lane recently warned complacencyrisked entrenching low inflation and reducing price growthexpectations, making it even more difficult for the ECB todeliver on its target. Some economists took his words as a hintthe bank is preparing to expand stimulus even further.
That extra support may be needed as the new business indexfor the service sector fell below 50 to 49.8 from July’s 51.4.
“Although the relative strength of the PMI data in July andAugust mean the autumn is likely to still see the economyrebound strongly from the collapse witnessed in the spring, thesurvey highlights how policymakers will need to remain focusedfirmly on sustaining the recovery as we head further into theyear,” Williamson said.(Reporting by Jonathan Cable; Editing by Hugh Lawson)
ANA NEWS WIRE Disclaimer:
The African News Agency (ANA) is a news wire service and therefore subscribes to the highest standards of journalism as it relates to accuracy, fairness and impartiality.
ANA strives to provide accurate, well sourced and reliable information across Text, Images and Video. Where errors do appear, ANA will seek to correct these timeously and transparently.
The ANA platform also contains news and information from third party sources. ANA has sought to procure reliable content from trusted news sources but cannot be held responsible for the accuracy and opinions provided by such sources on the ANA platform or linked sites.
The content provided for on the ANA News Wire platform, both through the ANA news operation and via its third party sources, are for the sole use of authorised subscribers and partners. Unauthorised access to and usage of ANA content will be subject to legal steps. ANA reserves its rights in this regard.
ANA makes every effort to ensure that the website is up and running smoothly at all times, however ANA does not take responsibility for, and will not be held liable for times when the website is temporarily unavailable due to technical issues that are beyond our control.