Manufacturers across the eurozone experienced a slight rebound in May as coronavirus restrictions began easing across many of the member states.
IHS Markit’s eurozone manufacturing PMI gave a reading of 39.4 in May, up from a record low of 33.4 in April, but manufacturers still recorded sharp falls in new orders and output.
“Despite being generally looser across the region compared with April, government restrictions designed to limit the spread of the global coronavirus disease (COVID-19) continued to severely hamper the sector,” IHS Markit said in its report.
“The improvement in part merely reflects the comparison against a shockingly steep fall in April, but more encouragingly was also linked to companies restarting work as virus lockdowns were eased,” said Chris Williamson, chief business economist at IHS Markit.
“While we are still set to see unprecedented falls in industrial production and GDP in the second quarter, the survey brings hope that the goods-producing sector may at least see some stabilisation – and even potentially a return to growth — in the third quarter.”
Italy, which was the first EU country to be affected by the pandemic, was the best performing country in May’s survey, with a more than 14-point monthly increase in its PMI from April.
Manufacturing powerhouse Germany, the largest EU economy, recorded the lowest PMI of all countries, followed by Spain. Germany’s manufacturing sector’s reading rose to 36.6 in May from 34.5 in April.
Spain’s manufacturing PMI rose to 38.3 in May, from 30.8 in April, according to IHS Markit, which noted that this figure signals “a further steep downturn in operating conditions amid ongoing economic restrictions.”
European Central Bank president Christine Lagarde warned last week that the eurozone’s economic output was likely to fall by between 8% and 12% in 2020.
The European Commission also last week put forwards its proposal for a €750bn (£674bn, $835bn) coronavirus recovery plan, which would be issued as a mixture of grants and loans to help revive member states’ economies.
Countries like Spain and Italy, which have been the worst affected in terms of COVID-19 deaths, would stand to receive more than €300bn in grant and loans money.
However, the support package will need the approval of all 27 member countries, and already Austria, the Netherlands, Denmark, and Sweden have said they won’t support grants, only loans.
Germany is debating its own stimulus package worth around €75bn to support national economic recovery after the coronavirus pandemic.