Eurozone Factory Activity Bounced Back in July

A survey on Monday showed Eurozone factory activity growth for the first time since early 2019 last month on the recovery in demand after a further easing of the restrictions of Covid-19

Over 18 million people have been infected by the Covid-19. But governments across Europe eased some of the restrictions that closed a wide range of the region’s economy.

In order to boost the depressed economy, the European Central Bank has agreed on stimulus measures and European Union leaders have agreed to a € 750 billion economic recovery fund.

The economy shrank 12.1% in Q2 of the year, official data showed on Friday, but a poll conducted by Reuters in July predicted 8.1% growth this quarter.

Factories appear to be playing a recovery role. The IMS Market index of manufacturing purchasing managers rebounded to record 51.8 in July from 47.4 in June – exceeding the 50-point level between growth and contraction for the first time since January 2019. The initial reading of the index released earlier was 51.1 .

An index that measures output and feeds, purchasing managers’ index jumped to 55.3 from 48.9, the highest level since April 2018.

“Euro zone factories reported a very positive start to the third quarter, with production growing at the fastest rate for over two years, fuelled by an encouraging surge in demand,” said Chris Williamson, chief business economist at IHS Markit.

“Growth of new orders in fact outpaced production, hinting strongly that August should see further output gains.”