Global Economy Shows First Signs of Recovery

JamesHLith

The global economy is gradually improving as more businesses reopen across the U.S., Europe and Asia.

"A composite index produced by data firm HIS Markit pointed to a more gradual decline in business activity in the U.S., suggesting a possible rebound in the coming months. The firm’s U.S. purchasing managers index for manufacturing was 49.6 and its services index was 46.7 in June, in both cases the highest reading in four months. The composite index on the month was 46.8, also the highest in four months", the Wall Street Journal reports. If the level is below 50 there has been a decline in activity.

These reports point to a gradual increase from the sharp decline seen in March. The U.S. economy will still remain weaker than at the start of the year for some time. The manufacturing and service sectors have started to stabilize for the first time in months. The U.S economy, while far from recovery, appears to have started the process of recovery. The countries that implemented the most stringent lockdown measures are the ones showing the clearest signs of recovery.

"In the eurozone, the composite Purchasing Managers Index—a measure of activity in the manufacturing and services sectors—rose to 47.5 in June from 31.9 in May to reach its highest level since February, the month before lockdowns began." Countries such as Germany and Japan that imposed lighter lockdown restrictions are showing continued declines.

As cases increase in Arizona, Florida and Texas there are fears that this slight recovery will be short lived. "Federal Reserve officials have cautioned against reacting too strongly to hints of positive data, noting that the U.S. faces a long road to recovery.

Economists across the globe "still expect to see the sharpest contraction on record for many parts of the global economy in the second quarter, but are moderating their estimates of the size of that decline in output amid signs that consumer spending has picked up in recent weeks and job losses are smaller than feared".

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