EcoWeek

Economic improvement against a background of epidemic resurgence

Eco week 21-13 // 2 April 2021  
economic-research.bnpparibas.com  
6
ECONOMIC PULSE  
EUROZONE: ECONOMIC IMPROVEMENT AGAINST A BACKGROUND OF EPIDEMIC RESURGENCE  
The resurgence of the Covid-19 pandemic in Europe has led to new Hard data are starting to confirm this performance. Industrial  
health measures in most countries: restrictions were extended to the production in the eurozone has rebounded significantly over the past  
entire territory of France; Germany tightened its border controls; and year. It is also observed in the services sector. However, the latter  
Italy extended restrictions until the end of April. Given this difficult continues to be more directly affected by health measures. Although  
situation, the eurozone economy sent some signs of improvement the services sector PMI gained ground in March (taking it to 48.8,  
over the last three months, compared to the previous quarter. These from 45.7 in February) after several months of stagnation, it remains  
dynamics are displayed in the chart below, with the blue area beyond below 50, and thus in contraction territory. A sustained recovery in  
the dotted line for almost all indicators.  
the services sector relies on consumer spending. This in turn will be  
supported by consumer confidence within the eurozone – which has in  
fact improved, but remains below pre-crisis levels. A rapid and lasting  
economic recovery will only be possible when the pandemic is brought  
fully under control, in other words once the vaccination campaigns in  
eurozone member states have been stepped up. Fiscal and monetary  
policy will remain accommodating until a return to more normal  
economic conditions. The European Central Bank, in particular, will be  
careful to ensure favourable financing conditions for economic agents.  
The current marked increase in inflation results largely of temporary  
factors, and will not change the monetary policy stance.  
Without over-optimism, the latest data send positive signals about  
the eurozone recovery, partly reflecting the adaptation of European  
populations to the health measures in force. The manufacturing sector  
has done particularly well. The Purchasing Managers Index (PMI) for  
the sector has been on a rising trend since the spring of 2020 and the  
improvement over recent months has been clear. Indeed, in March, it  
reached a new record high of 62.5, driven in part by the strength of the  
new export orders’ and ‘employment’ components (which hit 62.4 and  
4.7 respectively). All of these indicators are above their long-term  
average.  
5
Louis Boisset  
QUARTERLY CHANGES  
3
-month moving average (actual)  
Effective Exchange Rate  
2
.0  
--- 3-month moving average (4 months ago)  
Core HICP  
1.5  
PMI Manufacturing  
1
0
0
.0  
.5  
.0  
Unemployment Rate  
PMI Services  
-
-
-
-
-
-
0.5  
1.0  
1.5  
2.0  
2.5  
3.0  
Real Money  
Supply M1  
PMI Manufacturing  
Employment  
PMI Manufacturing  
New Export Orders  
Retail Sales  
Industrial Production  
Economic Confidence  
Business Climate Indicator  
SOURCE: THOMSON REUTERS, BNP PARIBAS  
The indicators in the radar are all transformed into ‘z-scores’ (deviations from the long-term average, as standard deviations). These z-scores have mean zero and their values  
are between -3 and +2. In the radar chart, the blue area shows the actual conditions of economic activity. It is compared with the situation four months earlier (dotted-line). An  
expansion of the blue area compared to the dotted area signals an increase in the variable.  
The bank  
for a changing  
world  
QUI SOMMES-NOUS ? Trois équipes d'économistes (économies OCDE, économies émergentes et risque pays, économie bancaire) forment la Direction des Etudes Economiques de BNP Paribas.
Ce site présente leurs analyses.
Le site contient 2682 articles et 705 vidéos