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The IHS Markit report warned “business activity fell sharply in November as countries introduced more aggress measures” to curb the spread of the virus across the European Union’s single currency bloc. Their purchasing Managers’ Index reading slumped from 50.0 in October to 45.1 in November, a six-month low for the key metric. The figure takes into account economic trends in the manufacturing and services sectors.
“With the exceptions of the declines seen in the frost two quarters of this year, the average PMI reading of 47.6 in the fourth quarter so far is the lowest since the closing quarter of 2020 and indicative of a steep decline in GDP,” the report said.
The fresh slump puts the bloc’s economy on track for its first double-dip recession in nearly a decade.
“The euro zone economy has plunged back into a severe decline in November amid renewed efforts to quash the rising tide of COVID-19 infections,” said Chris Williamson, chief business economist at IHS Markit.
“The data add to the likelihood that the euro area will see GDP contract again in the fourth quarter.”
There were worrying signs for the French economy with business activity in the country contracting at its fast pace since May.
IHS Markit said the PMI dropped to 39.9 from 47.5 last month after a second national lockdown was imposed amid a second coronavirus wave.
“These results suggest that some French businesses have been able to adapt their operations to the new conditions and are subsequently less susceptible to sharp downturns in activity when tighter restrictions are imposed,” IHS Markit economist Eliot Kerr said.
Emmanuel Macron said the second lockdown would last at least four weeks after the measures were announced on October 30.
The services sector is expected to be hit by the brunt of the downturn with most non-essential shops, restaurants and hotels forced to shut their doors.
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