The economic recovery in the eurozone came to a halt in September, as a surge in COVID-19 infections led to a new decline in service sector activity across the region.
The existence of a two-speed economy is evident, as factories report that production growth may boost demand, especially from export markets and the reopening of retail stores in many countries, but the larger service sector has declined again as a face-to-face consumer. Businesses in particular have been hit by concerns. The virus is growing.
Job losses also increased in the services sector as more companies became concerned about costs and overheads. Fortunately, factories saw a slowdown in layoffs as capacity began to squeeze, indicating that the overall rate of job cuts has peaked.
The encouragement comes from further improvement in corporate expectations for the coming year, but that optimism often hinges on lower infection rates, which remains far from a guarantee for the coming months. So the main concern at the moment is whether the weak September data will intensify in the fourth quarter, and result in a slide back into recession after a brief disappointing recovery in the third quarter.