The historic downturn in private sector activity in the eurozone eased in June with the reopening of large areas of activity that had been closed to curb the spread of the coronavirus. The upturn is particularly notable in France, where private sector activity has returned to growth for the first time in four months.
The IHS Markit flash PMI composite index rebounded to 47.5 in June from 31.9 in May and a record low at 13.6 in April, a stronger-than-expected improvement since the consensus was out of 42.4. When the PMI is above 50 points, it means that activity is growing, that the economy is growing. It regresses if it is below this threshold.
Flash Eurozone PMI shoots up to 47.5 in June (31.9 in May) to signal a far softer economic downturn than at the pea… https://t.co/KNyogXvVx2
For Chris Williamson, chief economist at IHS Markit, “The recovery in the PMI index in June gives hope for the start of an economic recovery during the summer”. But “The strength and viability of any economic recovery seem difficult to determine, however, given the uncertainty surrounding the time required for a return to normal”. According to him, ” three years “ could flow “Before the euro zone regains the level of GDP reached before the start of the pandemic”.
Activity resumes growth in France
Activity in the French private sector has improved beyond expectations since the start of June, returning to growth after three months of slowdown, according to the first results of the IHS Markit survey.
The services PMI rose to 50.3 after 31.1 in May, and the manufacturing index rose to 52.1, its highest since September 2018, after 40.6 in May. The composite index, which brings together the manufacturing and services sectors, rose to 51.3 in June from 32.1 in May.
June’s Flash France PMI pointed to a rebound in activity as the country’s lockdown measures were further wound down… https://t.co/6XaYgynpJz
Uncertainties in Germany
In Germany, activity in the private sector has improved but remains in contraction, the disturbances and uncertainties linked to the coronavirus continuing to weigh on the demand of the first economy of the euro zone, according to provisional indices published Tuesday by IHS Markit .
The composite PMI index returned to 45.8 at first estimate “Flash” for the current month. In services, which were particularly affected by the containment measures, the slowdown in activity has lessened, the activity index is at 45.8 whereas it was expected at 42.0 after 32, 6 in May.
The IHS Markit Flash Germany PMI pointed to another sharp contraction in private sector business activity during Ju… https://t.co/plehWCRcaz
Clearly improved in the UK
The slowdown in the British private sector eased more than expected in June with the reopening of many companies after the partial lifting of containment measures.
The PMI composite index rebounded to 47.6 from 30.0 in May, a record increase. “The June PMI data add to the signs that the British economy should resume growth in the third quarter, especially given the continued deconfinement expected from July 4”said IHS Markit chief economist Chris Williamson.
🇬🇧 IHS Markit’s Flash UK #PMI rose considerably to 47.6 in June ⬆️ from 30.0 in May, to signal a vastly improved pi… https://t.co/QX5VNv0y0C
Manufacturing activity improved more than expected, the index rose to 50.1 in June, after 40.7 in May, while the services index (which does not take into account the sector distribution) climbed to 47.0 from 29.0 the previous month.
WTO anticipates 18.5% drop in world trade in second quarter
International trade is forecast to drop by 18.5% in the second quarter due to the Covid-19 pandemic, the World Trade Organization (WTO) announced on Tuesday June 23.
“The drop in trade we are witnessing today is on an unprecedented scale, it would in fact be the strongest ever recorded”said WTO director general Roberto Azevedo in a statement. “But there is still an important comforting aspect: it could have been much worse. This is genuinely positive news, but we cannot afford to relax our efforts. “, he added.
The head of the WTO said “The decisions implemented œhave been instrumental in mitigating the blow to production and trade “, ensuring that“They will continue to play an important role in determining the pace of economic recovery”.
“To ensure a strong recovery in production and trade in 2021, fiscal, monetary and trade policies will all have to go in the same direction”, he warned.