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Europe’s Economic Recovery Stumbles After Initial Bounceback

Stock Markets Aug 21, 2020 04:18AM ET
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© Reuters. Europe’s Economic Recovery Stumbles After Initial Bounceback

(Bloomberg) -- The euro-area economy unexpectedly lost momentum this month as renewed travel restrictions and concerns about the coronavirus took a toll on services.

The sharp slowdown shows that the path out of recession won’t be plain sailing, and undermines lingering hopes for a V-shaped recovery. While infections are on the rise, economic concerns mean governments are so far reluctant to re-impose the type of strict lockdowns seen earlier this year.

In a report published Friday, IHS Markit said its composite measure of private-sector activity dropped to 51.6 in August from 54.9 in July. The manufacturing gauge remained virtually unchanged, but services plunged to 50.1, a level that practically signals stagnation.

The economy had initially bounced back strongly after lockdowns were eased, though many were concerned that the pace could fade. At their last meeting in July, European Central Bank policy makers were reluctant to draw firm conclusions about the health of the economy, a stance that looks justified by Friday’s numbers.

The fallout on jobs in both sectors continued, with employment declining for a sixth straight month. That’s a key worry for governments, who fear a damaging rise in joblessness could persist for some time. While France and Germany, the euro area’s biggest economies, continued to see growth in activity, the Markit report suggested output declined in Italy and Spain.

“The euro zone stands at a crossroads,” said Andrew Harker, economics director at IHS Markit. “The path taken will likely depend in large part on how successfully Covid-19 can be suppressed and whether companies and their customers alike can gain the confidence necessary to support growth.”

Europe’s Economic Recovery Stumbles After Initial Bounceback
 

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Comments (3)
Jaundiced Eye
Jaundiced Eye Aug 21, 2020 9:04AM ET
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The pizza is government-subsidized.
Srinuvasa Reddy Singam
Srinuvasa Reddy Singam Aug 21, 2020 8:56AM ET
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Monday market trend please.
Jo Doe
Jo Doe Aug 21, 2020 7:42AM ET
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That margherita pizza looks so yummy. That wood masonry baked crust.
 
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