France’s economic recovery stumbles as Covid-19 cases rise

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(Bloomberg) – France’s economic recovery stumbled this month, with a report pointing to declining activity, demand and employment in the private sector.The IHS Markit purchasing managers’ composite index unexpectedly fell to a four-month low of 48.5 from 51.6 in August, with services leading the decline. That’s below the 50 key line and compares to the forecast for a reading of 51.9.

The euro continued its decline against the dollar and fell 0.2% to $ 1.1681 at 9:16 a.m. KST.

The report linked the drop to the increase in coronavirus cases seen across Europe in recent weeks. Countries have imposed new restrictions on movement in an attempt to reverse the trend, hitting businesses.

The decline in the PMI follows a rebound from the lock-up earlier this year that turned out to be stronger than expected. But while the short-term growth outlook has improved, governments and central banks are convinced that a full recovery will take much longer and that many sectors are still struggling.

France’s services index fell to 47.5 in September from 51.5 in August, while the manufacturing gauge fell from 49.8 to 50.9.

Governments have said they are reluctant to impose full shutdowns again in response to the virus, but companies are still concerned about such an outcome. According to Markit, some companies were reluctant to hire staff “because of fears of a second extended lockdown”.

(Updates with the euro in the third paragraph)

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