Eurozone PMI survey: economy has ‘likely bottomed out’

[Sergey Golubev]

Eurozone PMI survey: economy has ‘likely bottomed out’

The eurozone’s economic slump has “likely bottomed out” after the bloc suffered a disastrous collapse under lockdowns to contain coronavirus, a closely watched survey by IHS Markit said Thursday.

The contraction across the 19 EU nations using the euro continued in May for the third straight month, but “the rate of decline eased as parts of the economy started to emerge from lockdowns,” the firm’s purchasing managers’ index (PMI) revealed.

The index for May came in at 30.5 points — well above the catastrophic 13.5 recorded in April, but still well below the 50-point threshold between contraction and expansion.

“The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April,” IHS Markit’s chief business economist Chris Williamson said.

Eurozone GDP in the second quarter “is still likely to fall at an unprecedented rate, down by around 10 percent compared to the first quarter, but the rise in the PMI adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer,” he said.

Another economy-watching firm, Capital Economics, agreed that the data pointed to the eurozone’s economy having “probably reached the bottom in April, providing some hope that the economy is now slowly on the road to recovery”.

It cautioned that the euro area would likely be “remaining very depressed even as lockdown measures are being gradually lifted”.

source..