France’s Economic Recovery Stumbles as Covid-19 Cases Surge
(Bloomberg) -- France’s economic recovery stumbled this month, with a report showing a decline in activity, demand and employment in the private sector.
IHS Markit’s composite Purchasing Managers Index unexpectedly fell to a four-month low of 48.5 from 51.6 in August, with services leading the decline. That’s below the key 50 line and compares with forecasts for a reading of 51.9.
The euro extended its decline against the dollar, and was down 0.2% to $1.1681 as of 9:16 a.m. Paris time.
The report linked the decline to the rise in coronavirus cases seen across Europe in recent weeks. Countries have imposed new restrictions on movement in a bid to reverse the trend, hitting businesses.
The drop in the PMI follows a rebound from the lockdown earlier this year that proved stronger than anticipated. But while there have been upgrades to the near-term growth outlook, governments and central banks are clear that full recovery will take much longer, and many industries are still in trouble.
France’s services index dropped to 47.5 in September from 51.5 in August, while the manufacturing gauge rose to 50.9 from 49.8.
Governments have said they reluctant to impose full shutdowns again in response to the virus, but companies are still concerned about such an outcome. According to Markit, some firms were hesitant to hire staff “due to fears of a second prolonged lockdown period.”
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