Business activities in the Eurozone contract due to the lockdown


A survey showed that economic activity in the eurozone recorded a significant contraction in January, with the services sector dominating the bloc severely affected by the general isolation restrictions imposed to contain the Corona virus, according to what was published by “Reuters”.
The survey highlighted a sharp contraction in the service sector, with hospitality and entertainment companies forced to remain closed in most parts of the European continent, but the survey also showed that the manufacturing sector remained strong with most factories continuing to operate.
The initial reading of the IHS Markit composite index of purchasing managers, which is a good indicator of the strength of the economy, fell further from the 50 level separating growth and contraction to 47.5 in January from 49.1 in December. A Reuters poll expected a drop to 47.6.
“Increasingly, it appears that avoiding a recession … in the eurozone economy is not possible as tighter restrictions to combat COVID-19 affected the business more negatively in January,” said Chris Williamson, chief economist at IHS Markit.
The services PMI fell to 45.0 in January from 46.4 in December, beating expectations from a Reuters poll to record a further drop to 44.5, and the reading is still well above historic lows recorded at the start of the pandemic.
Factory activities remained strong and the manufacturing PMI cohesion was above the 50 level, recording 54.7, but lower than last month’s 55.2 and higher than a Reuters poll forecast of 54.5.
An index measuring production and feeding the composite PMI fell to 54.5 from 56.3.


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