Eurozone manufacturing numbers to reflect record slump
The Markit Composite PMI—an index measuring manufacturing and services output in the Eurozone—is projected to log a record slump today, falling to 13.6 in April, down from March’s 29.7. In contrast, the rating has in recent years consistently hovered around 50, the figure that marks expansion.
European economies have experienced their worst output declines since World War II, with new business and employment numbers on a downward trend. In order to combat the predicted 12% contraction in the European economy, the European Central Bank (ECB) has vowed to pay banks in return for distributing low interest loans in hopes of pumping over $4 trillion into the market.
Nevertheless, the ECB maintains its position that a return to pre-pandemic levels of activity shouldn’t be expected until 2021. The ECB’s burden could be eased by a new agreement between France and Germany to support a $500 billion collectivised loan package, although the proposal has been met with opposition from wealthier northern EU member states that provide a disproportionate amount of the bloc’s budget. Although the fund has yet to be approved by the 27 members, its announcement boosted Italy’s hard-hit bond market over the weekend. Germany’s agreement to support the debt fund after initial opposition signals that the EU could be ready to make further progress toward economic recovery.
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