Economic data has revealed shrinkage in economic activity in the euro zone in October as the second wave of coronavirus hit the region necessitating a new set of measures and restrictions across several countries.
From the preliminary data released on Friday October 23, 2020, the flash Eurozone Composite Purchasing Managers Index, dropped to 49.4 in October, a four-month low index, compared to September’s 50.4. The October reading that stood below 50 reflects a marked contraction in activity.
According to the latest data, services-related activities have decreased to a five-month low but on the other hand, over the last month, manufacturing has been able to hold through as it keeps to enjoy robust growth since 2018.
Confirming the fast growth in manufacturing, IHS Markit’s chief business economist, Chris Williamson, said that the recent data showed, “manufacturers enjoying the fastest growth since early-2018, but intensifying Covid-19 restrictions took an increasing toll on the services sector.”
Speaking further about the fall in business activity in October as a result of the second wave of the pandemic that has hit the euro zone, Williamson said, “The euro zone 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.”
France as an example had its composite output index in October stood at 47.3 as opposed to 48.5 in September.
In an attempt to contain the second wave of the virus, after introducing new curfews last week, France hoped to expand restrictions to other regions on Thursday. If effective, cities such as Paris, Lyon and Marseille would see restaurants and bars close at 9 p.m. local time.
Germany on the other hand saw its overall economy boosted in October largely by its manufacturing industry as its composite output index shot up to 54.5.
Other countries in the euro zone have also adopted similar approach as all sorts of measurements and restrictions have been put in place.
In Ireland for instance, authorities have announced a four-week ban on visiting households. Partial lockdown in Netherlands is no exception as restaurants and bars have been ordered to close, and more than three home visitors per day is disallowed in the country.