Upturn in the July-September quarter — and the worries about what’s ahead — echoed the situation in the United States where re-openings led to strong third-quarter recovery but didn’t dispel fears for the winter months. Rebound was led by France, with an enormous 18.2% increase, followed by Spain with 16.7% and Italy with 16.1%. While these strong growth figures are good news, the recent reintroduction of strict containment measures across the bloc is likely to push the recovery into reverse.
Manufacturing companies have seen a stronger bounce back than services. Automakers like Volkswagen and Daimler AG’s Mercedes-Benz have seen sales and profits rebound, helped by their exposure to China, where the virus hit earlier but has since mostly been contained. Meanwhile, businesses that rely on face-to-face interaction, such as restaurants, hotels and airlines have been devastated and are seeing only a small fraction of their previous business. Rising infections led the German government to order theaters, bars and restaurants to close from Monday through Nov. 30. Transport company FlixMobility said it was temporarily halting its Flixbus service in Germany, Austria and Switzerland and FlixTrain service in Germany starting from Tuesday, saying that the government has asked people to limit travel as much as possible. The company said that FlixBus hoped to resume in time for the holidays; FlixTrain plans to resume “once the situation around corona improves in 2021. Eurostat reported that euro area inflation was stable in October compared to September, at minus 0.3%. That is another reason the ECB may soon add stimulus. Although the negative reading is partly due to one-time factors such as a temporary cut in value-added tax in Germany, it is also a sign of weakening demand and far from the central bank’s goal of below but close to 2% considered best for the economy.