Germany’s economic crash eases as it lifts coronavirus lockdown
The plunge in German business activity eased somewhat in May, survey data has shown, although Europe’s biggest economy remained in a dire position even as it eased coronavirus restrictions.
IHS Markit’s composite purchasing managers’ index (PMI), which gauges the health of the private sector, rose markedly to 31.4 in May from 17.4 in April, according to today’s early estimate.
However, this was still the second-worst score in more than 20 years of the index. It was also well below the 50 mark that separates contraction from expansion.
German firms continued to slash jobs and discount prices for goods and services. This was despite companies becoming less pessimistic about the future as the economy reopened.
Once again, manufacturing and service sector output dropped sharply. The falls were considerably slower than in April, however.
The data comes as Germany eases its coronavirus lockdown. The country has suffered fewer coronavirus deaths compared to its neighbours with 8,000 compared to 21,000 in France.
Its stronger grip on the virus allowed Germany to start reopening its economy relatively early. Some easing began in April and shops were allowed to reopen in early May.
Nonetheless, it has still been economically battered by coronavirus. A plunge in global demand has caused its export-dominated economy to suffer.
Phil Smith, Principal Economist at IHS Markit said: “Any hopes of a swift pick-up in activity across the German economy following the easing of lockdown restrictions have been somewhat dashed by May’s flash PMI survey.”
He said that Germany is “still a long way off business as usual and the path to recovery remains unclear”.
“With demand expected to remain below ‘normal’ levels for quite some time, firms are continuing to cut workforce numbers at a worrying rate.”