France Dragged Back Into Economic Slump by Virus Resurgence

(Bloomberg) -- The resurgence of the coronavirus has dragged France’s economy back into a slump, cutting short the recovery from the lockdown recession.

IHS Markit’s monthly survey of business activity dropped more than economists forecast in October, falling to a five-month low of 47.3 from 48.5. A gauge for services dropped even further below the 50-mark that distinguishes expansion from contraction, reflecting the return of restrictions that have crimped demand.

New orders fell for a second month, driven by a “sharp reduction” in services, according to IHS Markit. In Paris and eight other major French cities, authorities have imposed a curfew that is hitting restaurants and bars particularly hard.

There was further evidence of a squeeze on profits, with businesses cutting prices even as costs rose. Employment declined, as did confidence, according to the report. The Purchasing Managers’ Indexes for Germany and the euro area due later Friday are expected to show similar weakness in services.

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