“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. Demand also showed signs
of reviving, helping curb the pace of job losses.
“The data add to signs that the economy should
see a strong rebound after the unprecedented
collapse in the second quarter.
“However, while the survey’s output measures hint
at an initial v-shaped recovery, other indicators
such as backlogs of work and employment warn of
downside risks to the outlook.
“The concern is that the recovery could falter after
this initial revival. Firms continue to reduce
headcounts to a worrying degree, with many
worried that underlying demand is insufficient to
sustain the recent improvement in output. Demand
needs to continue to recover in coming months, but
the fear is that increased unemployment and
damaged balance sheets, plus the need for
ongoing social distancing, are likely to hamper the