Editor’s note: The following is a transcript of the accompanying video. ©2020 Thomson Reuters.
A loosening of restrictions and businesses finding ways to reopen appears to be paying off in the euro zone. The historic downturn in the region’s economy eased again this month.
IHS Markit’s Flash Composite Purchasing Managers’ Index, or PMI, seen as a good gauge of economic health, recovered to 47.5 from May’s 31.9. It’s gradually moving closer to the 50 mark, which separates growth from contraction. In April it hit a record low of 13.6.
Although new cases are still being reported, governments across Europe have eased restrictions on both citizens and businesses. Activity in the bloc’s dominant service industry shrank for a fourth month, but at a gentler pace. Suggesting pent-up demand gathered when people were forced to stay home, the new business index climbed to over 45 from 29.9.
Second quarter GDP is likely to have dropped at an unprecedented rate, though. And factory activity in the region, which was contracting long before the crisis, declined again this month. The manufacturing PMI though rose. Worryingly for governments and policymakers, head count reduced again. The employment sub-index held stubbornly below 50 although it was up from May’s low.