Euro zone business activity contracts but vaccine hopes keep market optimism afloat

Euro zone business activity fell sharply in November as reinstated virus-related restrictions forced a number of firms in the bloc’s service industry to cease operations temporarily. However, market optimism remains alive and kicking as news of possible vaccines fill the news reports recently – as expressed by economists in a survey.

The euro zone economy is on the verge of suffering from a double-dip recession in almost a decade as the continent experiences a second wave of coronavirus spread – according to a Reuter’s survey released last week. But news of a possible early vaccine rollout on Monday provides a big lift to the bloc’s struggling economy.

HIS Markit’s flash composite Purchasing Manager’s Index dropped to 45.1, from a 50.0 mark in October. The reading went below Reuter’s poll of 46.1. More so, the euro zone’s services index shrank to 41.3 from a previous 46.9.

However, vaccine hopes and expected European Central Bank policy easing and stimulus was a boost to the economy, as the composite future output index rose to 60.1 from 56.5, the highest since February.

AstraZeneca of Britain announced its vaccine could be 90% effective without serious side effects. Pfizer and Moderna also previously reported to have developed effective vaccines that lifted Monday’s PMI for 2021, yielding the highest reading since before the COVID-19 era.