Queue for Covid-19 tests outside laboratory in Paris on September 22, 2020 in Paris, France.
Kiran Ridley | Getty Images News | Getty Images
Eurozone trade activity was hit in September as countries faced a second wave of coronavirus infections, preliminary figures showed on Wednesday.
The Flash Eurozone PMI (Index of Purchasing Managers) composite index – which measures both products and services – remained at 50.1, only advancing in the expansion area. A reading below 50 indicates economic contraction. This latest initial number points to a three-month low in economic activity for the sector.
The services sector is in a very critical state, with data showing that activity is at a four-month low in the current month. Production in the euro zone has been in positive territory and is at a 31-month high.
“The two-speed economy is clear. Factories have reported that growth in production has been stimulated by rising demand, especially in export markets and retail resumes in many countries, but the larger service sector has plunged into a face-to-face consumer decline.” Economist Chris Williamson said in a statement along with the information that businesses in particular have seen a sharp rise in virus concerns.
The European Center for Disease Control and Prevention said that as of September 22, there were 2.9 million confirmed infections in the region, with Spain and France now seeing more than 10,000 cases a day. Governments have announced new restrictions to prevent the spread of the virus, and economists are beginning to consider the economic impact of the new measures.
Elliott Care, an economist at IHS Markets, said in a statement on Wednesday that the sharp rise in the number of Covid-19 cases reported in France during September would help explain the first decline in business activity since May.
The sharp decline in activity in the French services industry has not been fully offset by manufacturing output. This reduced France’s overall index for the first time in four months, according to IHS Markets.
In Germany, economic slowdown slowed but was offset to some extent by its manufacturing industry. “Currently the main concern is whether the September data weakness will intensify in the fourth quarter and lead to a recession after a disappointing short rebound in the third quarter.”
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