Latest data released by Markit – 23 October 2020
- Prior 53.7
- Services PMI 46.2 v 47.0 expected
- Prior 48.0
- Composite PMI 49.4 vs 49.2 expected
- Prior 50.4
The readings here fit with the narrative with what we have seen from the German and French readings – more so the former – earlier in the past 45 minutes.
It reaffirms a two-paced ‘recovery’, where the manufacturing sector is keeping more resilient overall while the services sector momentum continues to fade into Q4.
Overall business activity eases slightly compared to September, with the composite reading moving back into contraction territory, but the decline in conditions is looking more measured (though it is also skewed by Germany’s resilience) – for now at least.
We will have to see how things go in November for a better sense of that.
“The eurozone 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.
“The survey revealed a tale of two economies, with manufacturers enjoying the fastest growth since early-2018 as orders surged higher amid rising global demand, but intensifying COVID-19 restrictions took an increasing toll on the services sector, led by weakening demand in the hard-hit hospitality industry.
“The divergence is even starker by country. While Germany is buoyed by its manufacturing sector booming to a degree exceeded only twice in almost 25 years of survey history, the rest of the region has sunk into a deepening downturn.
“While the overall downturn remains only modest, and far slighter than seen during the second quarter, the prospect of a slide back into recession will exert greater pressure on the ECB to add more stimulus and for national governments to help cushion the impact of COVID-19 containment measures, which not only tightened across the region in October but look set to be stepped up further in November.”
