Eurozone recovery stalls as PMIs suggest double dip recession

The euro zone’s economic recovery stalled last month as the second wave of Covid-19 combined with measure to control its hammered the service industry, and pointed to a double-dip recession, a survey showed on Wednesday.

IHS Markit’s final Composite Purchasing Managers’ Index fell to 50.0 in October from September’s 50.4, and above a preliminary reading of 49.4 which would have indicated a contraction.

The overall index was dragged down by the services PMI which fell to 46.9 from 48.0, its lowest since May when the first wave of the pandemic hit Europe.

Spain, France, Germany, Italy and Belgium have reimposed new tough lockdown measures, with restaurants, gyms and shops remain closed and citizens stay at home.

“Service providers have been hit especially hard, led by intensifying weakness in consumer-facing sectors such as hospitality, offsetting the brighter news seen in manufacturing during the month,” said Chris Williamson, chief business economist at survey compiler IHS Markit.

“Optimism about the future also slumped sharply lower, sliding to the gloomiest since May as companies grew more anxious about the damaging impact of second waves of infections. “

“For all countries the outlook has grown increasingly dark.”