The eurozone, doomed to a relapse in the fourth quarter and a slower recovery in 2021, according to PMI

Germany and France, the two main economies of the euro, registered a significant deterioration in activity in November

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The activity of companies in the euro zone has deteriorated significantly in November, with particular intensity in the services sector, as a consequence of the impact of the new wave of contagions and restrictions applied to stop the pandemic, which increases the risk that the euro bloc will register a new contraction in GDP in the fourth quarter and see recovery slowed in 2021, as suggested by data from the Purchasing Managers Index (PMI).

The preliminary reading of this leading indicator has been placed at 45.1 points, compared to 50 in October, which represents the worst result in six months, with a more intense deterioration in activity in the services sector, whose PMI index fell to 41.3 points in November from 46.9 in October, while the manufacturing data fell to 53.6 points, compared to 54.8 in October.

“The euro zone economy has sunk again on a sharp decline in November amid renewed efforts to stem the rising tide of Covid-19 infections, “he noted Chris Williamson, Chief Economist at IHS Markit, for whom the results of the survey “increase the chances that the euro zone will register a new contraction in GDP in the fourth quarter”.

In this sense, the expert warned that the new slowdown in the economy in the fourth quarter “represents a significant setback for the health of the region and prolongs its recovery period”, since IHS Markit forecasts now point to the fact that, After a GDP contraction of 7.4% in 2020, the recovery of the economy in 2021 will be only 3.7%.

Germany and France, the two main economies in the euro, posted a significant deterioration in activity in November, with a fall in the case of the German country of the composite PMI to 52 points from October 55, its worst reading in five months, including a six-month low in the services sector, with 46.2 points, compared to 49.5 in October, while manufacturing slowed its expansion, with a PMI of 57.9 points from 58.2 the previous month.

In the case of France, the decline in activity was even more pronounced, with the composite PMI index falling to six-month lows, to 39.9 points, compared to 47.5 in October, including a fall of the data for the services sector to 38 integers from 46.5 the previous month, while in industry the index fell to 49.1 points, compared to 51.3 in October.

In the rest of the countries, those responsible for the survey found that activity decreased for the fourth consecutive month, in addition to fastest rate of decline since May 2009 (with the exception of the collapse observed between March and June), including the near paralysis of manufacturing production and an ever more intense drop in activity in the services sector.

In this way, employment fell in the euro zone for the ninth consecutive month, affecting both the manufacturing sector and the service sector, although industry saw a certain slowdown in the rate of job loss, while the adjustment of workforce in the service sector gained intensity.

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