Business surveys released today show that this lockdown in the eurozone will – economically – be nowhere near as painful as it was in the spring. One reason is the remarkable pace at which the industry has adapted to the pandemic.
The latest purchasing managers’ index for the eurozone, which saw activity in November when many of the region’s economies – including the two largest, Germany and France – were stalled, fell below the crucial 50 level, which marks the difference between expansion and contraction of activity. However, the pace of decline in surveys compiled by data firm IHS Markit has been far less steep than it was earlier this year:
As the graph above shows, the manufacturing index even stayed in positive territory – which means that activity has expanded. More about the details in the sub-indices about JP Morgans Raphael Brun-Aguerre and Marco Protopapa:
Manufacturing resilience is broad. Incoming orders are still high in historical comparison (-4.7 points to 54.0), the employment index rose by 1.3 points to 48.5 and is now above the pre-virus level, and the issue price index is 51, 3 0.8 points firmer. The gap between manufacturing services is thus widening.
Like most economic indicators currently, the PMIs are an incomplete reader of the terms. However, the readings for manufacture are in line with other anecdotal evidence. In Germany, where the manufacturing value was an impressive 62.7 – enough to keep the country’s main index over 50 – automakers like VW are expecting a black year-end. Air freight figures show that commercial freight has recovered impressively in contrast to passenger numbers.
This was due to the rapid implementation of measures to protect workers, including the establishment of test sites in factories and the use of technologies used in elite sports to measure athletes’ performance and ensure workers are socially distant.
More and more industrial companies are carrying out complex projects through remote work. For example, several energy companies have drilled oil wells with far fewer on-site employees. Not quite what you can imagine when it comes to working remotely.
Of course, not all of the industry has done well. Super-widespread events like meat mills in Europe and the US come to mind.
Still, the pace at which manufacturers in Europe and elsewhere have adapted to the pandemic is remarkable.
Policy makers can learn from industry resilience – FT