Video: Manufacturers drive Europe rebound, services lag

Europe's economy is running at two speeds, with manufacturers recovering fast but services showing fresh signs of slowdown.

Editor’s note:
The following is a transcript of the accompanying video. ©2020 Thomson Reuters.

Manufacturers are driving recovery in the euro zone, according to the latest economy data. The closely watched PMI index for the sector jumped to 53.7 in September. That beat forecasts and was well above the key 50-point line that signifies economic expansion. Makers were boosted by a faster-than-expected rebound in demand. The new orders subindex rose to its highest since February 2018, suggesting the manufacturing revival is set to roll on.

But it looks like a two-speed economy right now, with services slamming into reverse. The index for the bloc’s dominant sector sank to 47.6 this month. That was down from 50.5, and below even the most pessimistic forecast in a Reuters poll.

Service providers of all kinds have been hit by a resurgence in health worries, and new lockdowns in some countries and regions. Put it all together and the composite PMI number, which combines services and manufacturing, just barely clung to growth at 50.1.

It was a somewhat brighter picture over in the UK, where all indexes at least stayed in positive territory. Though again, manufacturing posted a gain while services growth slowed down. The composite number dropped more sharply than forecast to 55.7.