The euro area private sector contracted sharply in May, but improved from April as lockdown restrictions implemented to prevent the spread of coronavirus loosened in many economies, survey results from IHS Markit showed on Wednesday.

The final composite output index rose to 31.9 in May from April's record low of 13.6. The score was above the flash reading of 30.5.

A score below 50 indicates contraction in the private sector. Respondents noted that containment measures continued to have a severe impact on economic performance.

Chris Williamson, chief business economist at IHS Markit said he remained cautious with respect to the recovery. "Our forecasters expect GDP to slump by almost 9% in 2020 and for a recovery to prepandemic levels of output to take several years."

New business continued to fall markedly in May and companies reduced their employment. Whilst there remained evidence of companies continuing to take advantage of furlough schemes, the net fall in employment remained severe and amongst the greatest in the survey history.

According to Eurostat, the unemployment rate in the currency bloc rose to 7.3 percent in April from 7.1 percent in March.

Business confidence remained negative overall in May, data from Markit showed. Data showed reductions in both operating costs and charges.

The final services Purchasing Managers' Index advanced to a three-month high of 30.5 from a record low 12.0 posted in April. The flash reading was 28.7.

The four largest euro area economies registered slower, albeit severe contractions in activity.

Italy was the best-performing, followed by Germany and France. Spain remained the weakest performing nation in May.

Germany's private sector remained in deep contraction territory in May. The final composite output index came in at 32.3 in May, but up from a historic low of 17.4 in April and the flash 31.4.

The services PMI advanced to 32.6 from 16.2 a month ago. The flash score was 31.4.

France's business conditions remained among the weakest since data collection began just over 22 years ago. The final composite PMI advanced to 32.1 from 11.1 in April. This was above the flash reading of 30.5.

At the same time, the services PMI increased to 31.1 from 10.2 a month ago and was better than the flash 29.4.

Italy's private sector also logged one of the fastest fall on record in May. The composite output index climbed to 33.9 from 10.9 a month ago. The services PMI came in at 28.9 versus 10.8 in April.

Similarly, Spain's private sector logged weaker contraction in May. The composite PMI posted 29.2 versus 9.2 in April. At the same time, the services PMI improved to 27.9 from 7.1 in the previous month.

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