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EUROZONE’S PMI JUMP: SIGNS OF ECONOMIC RECOVERY

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Copia-di-TASSI-INTERESSE-NEGATIVIJune’s flash purchasing manager’s index (PMI), which was released yesterday, came in at 47.5, up from May’s reading of 31.9. The PMI measures the activity in both the services and manufacturing sector in the euro zone.

Following the COVID-19 outbreak, the economic sentiment within Europe crashed, with the PMI falling to 13.6 in April. The PMI is based on a monthly survey sent to senior executives of large corporations. It ranges from 0 to 100, with a figure above 50 representing an expansion over the previous month, conversely a reading below 50 represents a contraction.

The 15.6-point increase was the second largest in the survey history, with May’s 18.3-point rise currently the largest on record, as stated by IHS Markit in its data release. June’s PMI at 47.5 also exceeded previous expectations as polled by Reuters, which predicted the PMI to come in at 42.4. This reading illustrates that the eurozone continued to recover from its downturn as Europe emerges from the pandemic.

The PMI’s recovery is reflective of the easing of lockdowns around most European countries, which amongst other, include the opening of borders both to air and sea travel. The European summer tourism and the restarting of this industry is expected to aid the economic recovery, and help bring the recent downturn to an end as we head into summer. Investors will carefully gauge July’s PMI to determine the health and continuation of the euro zone’s economic recovery. 

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