Second Coronavirus Wave Destabilizes European Recovery

Second Coronavirus Wave Destabilizes European Recovery

The second wave of the coronavirus now sweeping Europe is threatening to halt the region’s economic recovery, leaving many of its businesses and workers uncertain about their future and prolonging the time it will take for the continent to heal from the worst economic crisis in decades.

European governments have responded to the sharp rise in coronavirus infections with new restrictions on people and businesses, but have stopped short of the draconian lockdowns of the spring, hoping to protect the region’s economic recovery.

But fresh evidence suggests the second wave of infections is already interrupting Europe’s comeback from what was the deepest contraction the region has experienced in peacetime.

Data firm IHS Markit said Friday its composite Purchasing Managers Index for the eurozone fell to 49.4 in October from 50.4 in September. A reading above 50.0 indicates that activity is increasing, while a reading below points to a decline. The October measure indicates business activity fell for the first month since June.

“The survey revealed a tale of two economies, with manufacturers enjoying the fastest growth since early-2018, but intensifying Covid-19 restrictions took an increasing toll on the services sector,” said Chris Williamson, an economist at IHS Markit.