Factories in the Euro area began a long road to recovery after the government lifted lockdown restrictions, offering hope that the economy could return to growth in the coming months.
The size of manufacturing activity in all regions of 19 countries showed a marked easing in the decline caused by the pandemic in May, even though output and orders continued to decline, according to a survey by IHS Markit. Italy recorded the smallest contraction, while Germany fared the worst.
The data is the last several European Central Bank officials will receive before they set monetary policy on Thursday. Economists expect them to announce an increase in emergency asset purchases of 500 billion euros ($ 555 billion) to reduce the decline predicted by President Christine Lagarde of between 8% and 12%.
The ECB will publish updated projections with its policy decisions.
In May, manufacturers continued to reduce staff sharply and reduce prices amid weak demand and increased competitive pressures. At the same time, they become less pessimistic about next year.
“While we will still see an unprecedented decline in industrial production and GDP in the second quarter, this survey brings hope that the goods-producing sector can at least see some stabilization – and even a potential return to growth – in the third quarter. quarter, “said Chris Williamson, an economist at IHS Markit.
The euro area purchasing managers’ index rose to 39.4 in May from 33.4.
In Italy, where total output contracted 5.3% in the first quarter, far more than reported, more than a third of the companies surveyed reported an increase in output last month – up from 7% in April.
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