EMU Purchasing Manager: Second wave depresses the mood among service providers – Industry proves robust

Uncertainty is increasing among European service providers due to the rising number of infections in October. The tightening of corona protection measures is causing the purchasing managers‘ index for the service sector to fall significantly. In some countries, the catering and accommodation sectors are noticeably restricted. In addition, there are in some cases night-time curfews. With Ireland and the Netherlands, two countries are already in a kind of lockdown. This leaves traces and puts pressure on the sentiment among service providers. In industry, on the other hand, the sentiment measurement figures may even increase and prevent worse for the overall picture. According to IHS Markit, the comprehensive composite index from both sectors fell from 50.4 to 49.4 points in October. At the beginning of the fourth quarter, the growth prospects for the euro zone thus deteriorate. As there is no end in sight to the rising infection figures, further intensification of the virus control measures cannot be ruled out.

The mood among German purchasing managers in October is twofold. The index for industry may even improve significantly, while the index for service providers fell slightly and thus slipped into the contractionary range. The comprehensive Composite Index fell only slightly from 54.7 to 54.5 points. The industrial sector is in surprisingly good shape, while the mood among service providers is characterized by the new corona measures and increasing uncertainty. However, given the level of the Composite Index, the prospects for the German economy are comparatively good overall due to the robust situation in industry at the beginning of the final quarter.

In France, the rising number of infections is leaving more noticeable traces. The mood among purchasing managers has deteriorated further. According to the preliminary results published today, the composite index for France stands at 47.3 points, compared with 48.5 points in September. According to IHS Markit, this was due to a noticeable decline in demand. The services index slipped even further into the range below the neutral mark of 50 index points, again due to the tightening of containment measures. It now stands at just 46.5 points. By contrast, the industry can still hold its ground above this level thanks to robust production. Nevertheless, the French economy is currently losing momentum.

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