WORLD Eurozone PMI drops to 4-month low in October due to second wave of COVID-19


Eurozone PMI drops to 4-month low in October due to second wave of COVID-19


10:46, October 24, 2020

Eurozone economy fell back into decline with its PMI indicator dropping to four-month low in October, due to a second wave of coronavirus hit the services sector, a IHS Markit survey showed.

File photo: Reuters via CGTN

The flash IHS Markit Eurozone Composite PMI fell for a third consecutive month in October to 49.4 from to 50.4 in September, the first contraction of business activity since June. 

That was below the 50-mark separating growth from contraction and only fractionally better than the 49.3 predicted in a Reuters poll.

"The euro zone PMI confirms that the second wave of the coronavirus is weighing more and more on the economy. A double-dip in the fourth quarter is becoming more likely at this rate," said Bert Colijn at ING.

Screenshot from IHS Markit survey

The Composite PMI was dragged down by the service industry's PMI, which sank more than expected to 46.2 from 48.0.

"The further decline in the eurozone Composite PMI in October adds to the evidence that the second wave of infections, and the new wave of containment measures, is taking a heavy toll on the economy," said Jack Allen-Reynolds at Capital Economics.

The survey also revealed increasingly divergent trends by sector and region. 

Manufacturing output growth accelerated to the fastest since February 2018, IHS Markit Eurozone PMI and GDP supported by inflows of new orders surging at the quickest rate since January 2018. Conversely, service sector output fell for a second successive month, deteriorating at the sharpest rate since May.

Germany continued to report steady growth, the flash composite index merely dipping from 54.7 to 54.5 to register a solid expansion for the fourth month running. France meanwhile saw business activity deteriorate for the second month running, the composite flash PMI down from 48.5 to 47.3 to signal an increased rate of contraction.

(With input from Reuters)

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