Oxford Economics Says Indian Economy Recovering Faster Than Expected, Here Are The Factors Behind It
Eurozone’s second largest economy bounced back this month, although activity in the rest of the bloc continues to weaken.
France’s economy grew by 3 trillion euros this month for the first time since February, as restrictions were weakened and domestic consumption increased.
The original PMI, which tracks activity in the manufacturing and services sectors, jumped to 51.3 in June from May 32.1 pips. Readings above 50 indicate enlargement.
«France appears to be somewhat leading in terms of the pace of recovery, especially in terms of the manufacturing sector. The country is reaping the benefits of having companies that are more focused on the domestic market», – said Chris Williamson, Chief Business Economist, IHS Markit.
«We see any growth revival fueled by domestic demand», – he added, pointing to China as an example.
French President Emmanuel Macron said in March that no French company, regardless of its size, will be allowed to go bankrupt due to the effects of the pandemic. The government intends to spend about 521 billion euros to help the country recover, said the French finance minister. Bruno Le Maire.
The largest European economies continued to introduce easing in June, which allowed many companies to reopen production and increase demand for goods and services. Initial composite PMI for countries using the euro rises to 47.5 in June from a record low of 13.6 in April and 31.9 in May.
«Economic activity across Europe looks to be better than we expected at this stage of recovery back in late March», – says a note from economists Berenberg.
Although output continued to decline in both manufacturing and services, the rate of decline slowed significantly.. Job losses have sagged, but the number of workers in factories continues to fall.
«Production and demand are declining, not falling as before», – said Williamson.
However, he warned that the consolidation of PMI numbers near the 50 level simply demonstrates stabilization in the economy.. «This is not a return of business to normal.. We are still far from pre-crisis indicators», – he said.
EU GDP is expected to continue to contract sharply in the second quarter, after the most significant drop recorded in the first three months of 2020.
But a meteoric recovery in PMI data suggests GDP won’t be as disastrously bad as economists feared..
Some companies are still seeing declining demand as some customers are still cautious about spending their funds.
Williamson believes the challenge for governments will be to ensure that demand picks up enough to enable companies to weather the downturn and retain staff.
France plans to extend its employment support program for another two years. Earlier this month, the Minister of Labor Muriel Peano told Franceinfo radio that the government is considering measures that will allow people to work a reduced number of hours, partly paid by the state.
The government already promised to allocate almost 17 billion euros to protect the workforce in the country’s aviation industry by supporting such companies like Airbus and Air France as well as aerospace component suppliers Safran and Thalès.
IHS Markit expects European economic recovery to take three years.