Euro area PMIs correct after overshooting in July

The euro area composite PMI declined sharply in August to a level of 51.6 after 54.9 in July. The wild swings seen in the PMIs re flect the unique trajectory of the recovery following the end of the lockdown: after a big , mechanical surge in growth in the immediate aftermath of the lockdown, growth was expected to slow, as headwinds continue to weigh on the economy. The August PMIs are consistent with this growth outlook. The good news is that the economy is still expanding, though at a significantly slower pace than seen during May-July.