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Glimmers of hope as EU emerges from lockdown

While a further loosening of restrictions is anticipated in coming months, some measures to contain the virus are likely to remain in place until an effective treatment or vaccine is found

The rate of decline eased for the eurozone economy as parts of the region started to emerge from lockdowns, IHS Markit said in a report released on Friday.

The Markit Flash Purchasing Managers’ Index (PMI), one of the indicators most closely watched by global investors, rose in May from an all-time low of 13.6 in April to 30.5, its highest since February.

This was due to easing from record lows in manufacturing and services as Covid-19 restrictions are gradually removed in Member States, commented Markit Chief Business Economist Chris Williamson, in a note.

“The rise in the PMI indicated a markedly slower pace of contraction compared with April’s record collapse. Rates of decline eased in manufacturing and services, reflecting both a reduction in the number of companies reporting lower activity and an increase in the number of firms reporting an improvement,” the note said.

The rise in the PMI and its forward-looking indicators adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer, the note continues.

“All eurozone countries eased their Covid-19 containment measures to some extent in May, helping to moderate the overall rate of economic decline.

“However, while a further loosening of restrictions is anticipated in coming months, some measures to contain the virus are likely to remain in place until an effective treatment or vaccine is found.”

The rise in the PMI and its forward-looking indicators adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer.
However, while a further loosening of restrictions is anticipated in coming months, some measures to contain the virus are likely to remain in place until an effective treatment or vaccine is found.

The eurozone economy is still mired in its deepest decline ever.
Growth may slump almost nine per cent in 2020 and a full recovery may take several years, Williamson added.

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