Purchasing managers‘ indices in the eurozone: Like Phoenix from the ashes?

 

The mood among European purchasing managers improved significantly in June. The comprehensive Composite Purchasing Managers‘ Index on the common sentiment in the manufacturing and service sectors rose from 31.9 to 47.5 points. There was a clear upward trend in both the manufacturing and service sectors.

As rapidly as the mood clouded over in March and April, it appears to have been on the rise again since May. One could almost think that the crisis is over. But the eurozone is still a long way from that. After all, gastronomy and accommodation as well as the leisure and tourism industry will continue to suffer from the distance and contact restrictions. The lockdown until May should ensure that EMU’s gross domestic product in the second quarter will decline by around 10 percent compared to the previous quarter. These losses will first have to be made good.

German purchasing managers are also somewhat more confident in June. The comprehensive composite purchasing managers‘ index rose from 32.4 to 45.8 points in June. It thus remains below the neutral mark of 50 index points, as do the figures for the manufacturing sector (44.6 points) and the service sector (45.8 points). IHS Markit attributes the comparatively below-average sentiment in Germany to the drop in demand due to the uncertainty caused by the corona pandemic. Cancellations and postponements of orders are the consequence.

In France the mood among purchasing managers has recovered more clearly than in the rest of the EMU. The composite index rose by 19.2 points to 51.3 points. Both sectors – service providers and industry – even managed to jump above the 50 point mark. The easing of initial restrictions has led to a significant increase in economic activity. However, the purchasing managers surveyed still complain about declining demand. By contrast, the business outlook for the coming 12 months has brightened.

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