New Pandemic Lockdowns Trigger Economic Slowdown In Eurozone

The eurozone economy is backsliding amid a second lockdown in Europe triggered by a wave of new COVID-19 infections, according to a new analysis by IHS Markit released on Mondsy (Nov. 23).

The flash IHS Markit Eurozone Composite PMI dropped to 45.1 this month, compared to 50.0 last month. The data points to the likelihood of a drop in the fourth-quarter gross domestic product (GDP).

The service sector — especially hospitality, travel and consumer-facing firms — are being slammed the hardest, with declining output for the past three consecutive months. Manufacturing output also slowed.

The flash composite PMI for France dropped to 39.9, down from 47.5, marking the third consecutive monthly drop and the steepest since May.

Comparatively, Germany has weakened only slightly, with the flash composite PMI dropping from 55.0 to 52.0, the weakest expansion since July.

Business activity dropped for the fourth consecutive month in other parts of Europe, with manufacturing output growth almost at a standstill. Employment continued to fall across the eurozone for the ninth month in a row. Job losses are steady from October’s low.

Employment was up in Germany for the first time since February. France is still suffering job losses, but the number is the lowest since the start of the pandemic.

Third-quarter retail sales in the eurozone dropped in October, the most so far in 2020. But Black Friday sales on Oct. 29 were encouraging, with retail data firm Springboard noting that footfall was 3.3 percent higher on Black Friday compared to the same day last year.

The U.S. economy started surpassing the eurozone last month, as a second wave of infections triggered new lockdowns in most eurozone countries. Some parts of the U.S. are now under new restrictions, but have lagged behind those in Europe.

On Oct. 30, all 19 countries making up the eurozone economy were rebounding from the pandemic faster than anticipated. November lockdowns were expected to stall recovery. The European Central Bank said it was not anticipating any real economic growth through year-end.