The worst of Europe's coronavirus recession appears to be over, according to a set of widely-watched business surveys

• Some European economies are picking up from coronavirus-led recessions earlier in the year as they loosen lockdown restrictions and reopen businesses, a set of business surveys showed.
• IHS Markit's Composite Purchasing Managers' Index showed significant improvements in both manufacturing and service sectors in July for the UK, France, Germany, and the wider Eurozone.
• Output across the euro area grew at the fastest rate in over two years as economies reopened, Chris Williamson, IHS Markit's chief economist commented.
• An economist at UBS Wealth Management said a key area to watch out for in the months ahead will be the labour market as firms report an ongoing reduction in staffing requirements.
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Major European economies are bounding back from the initial coronavirus slump as they ease lockdowns and reopen business, according to a closely-watched set of business surveys.

The UK, Germany, France, and the wider Eurozone's manufacturing and service sectors are showing signs of marked improvement as output levels are returning to those seen prior to COVID-19, IHS Markit's Composite Purchasing Managers' Index, which surveys business leaders in the economy, showed.

"Companies across the euro area reported an encouraging start to the third quarter, with output growing at the fastest rate for just over two years in July as lockdowns continued to ease and economies reopened," Chris Williamson, chief economist at IHS Markit, said in a statement.

"Demand also showed signs of reviving, helping curb the pace of job losses."

The PMI is a common gauge to measure business performance and economic direction of trends in an economy.

During economic downturns, readings as low as 45 are generally considered poor, while during expansion PMIs tend to linger in the mid-50s range. During the worst of the crisis, some European PMIs feel to as low as 10.

But they now seem to be bouncing back.

Among a set of data released by IHS Markit on Friday, PMI for France turned out to be the highest.

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IHS Markit's Composite PMIs recorded for July 2020:

• France: 57.6 versus 51.7 in June
• UK: 57.1 versus 47.7 in June
• Germany: 55.5 versus 47 in June
• Eurozone: 54.8 versus 48.5 in June

"The strong bounce in PMIs in the UK and Europe this morning, led by the services sector, is a welcome sign that optimism and activity continue to improve as the economies transition out of lockdown," said Dean Turner, an economist at UBS Global Wealth Management.

What will be a key area to watch in coming months are the potential challenges ahead for the labour market as firms report an ongoing reduction in staffing levels, he said.

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