The euro area economy is recovering cautiously from the historic setbacks in March and April. That’s according to new estimates from British market researcher Markit on Thursday.
The spread of the coronavirus and the lockdown measures sent the Markit Purchasing Managers’ Index down to an all-time low of 13.6 points in April. As most euro area countries ease the measures, Markit is showing signs of recovery, with the index rising again to 30.5 points in May.
Nevertheless, this remains a very low result. Only when the index exceeds the 50-point mark will there be a further increase in economic activity. This decreases if the index remains below 50 points.
Low point reached
In the sector, the index rose 39.5 points from 33.4 points in April. The services index, including tourism, retail, hospitality and aviation, was expected to rise from 12 points in April to 28.7 in May.
“While global private sector activity in the euro area fell sharply again in May, the economic crisis could hit its lowest level in April,” Markit economist Chris Williamson said.
Williamson expects the decline to be more moderate in the coming months if governments can further ease the lockout measures. However, until a vaccine or effective treatment is effective, certain restrictions remain that would keep demand weak.
Markit expects the eurozone’s gross domestic product to contract by nearly 9 percent this year.