Pandemic puts brakes on eurozone business activity

Eurozone economic activity contracted in October in the wake of a resurgence in the spread of the coronavirus across Europe, IHS Markit said Friday.

The data provider’s closely watched PMI index fell for the third consecutive month to 49.2 points in October — its lowest level in four months — from 50.4 points in September.

Any reading above 50 points indicates that business activity is expanding, but a level below 50 points means the economy is contracting. 

It was the first contraction since June.

“Business activity fell back into decline across the eurozone in October as accelerating growth of manufacturing output was overwhelmed by a steepening deterioration in the service sector amid rising Covid-19 worries,” said IHS Markit’s chief economist Chris Williamson.

“Although the index remains well above the all-time lows seen during the height of the pandemic in the second quarter, the renewed decline raises the possibility that the region could see the economy contract again in the fourth quarter.”

Germany was “the only bright spot, as France and the rest of the region as a whole fell deeper into decline”, IHS Markit said. 

The country index for Germany slipped fractionally to 54.5 points, but at that level it “continues to register a solid expansion for the fourth month running”.

The barometer for France, by contrast, declined for the second month running, to 47.3 from 48.5, “to signal an increased rate of contraction,” IHS Markit said.