The Eurozone’s factory sector suffered its worst month since the bloc’s economic crisis of 2012 in March as coronavirus shut down swaths of the euro area’s economy.
The IHS Markit manufacturing purchasing managers’ index (PMI) – a gauge of the health of the sector – slumped to a lower than expected 44.5 in March from 49.2 in February. A score of under 50 indicates contraction.
An index measuring output plunged to 38.5 from 48.7, below an initial reading of 39.5 and the lowest since April 2009, in the depths of the recession that followed the worst of the financial crisis.
Italy’s factory sector was the hardest-hit by the virus. Its PMI tumbled to its lowest since 2009, with lay-offs rising markedly.
Factories sacked workers across the Eurozone last month, with the net reduction in staffing numbers the sharpest recorded by the survey in over a decade.
Figures worse than they appear
Chris Williamson, chief business economist at IHS Markit, said things were even worse in the bloc than the PMI suggested.
“Even the slide in the PMI to a seven-and-a-half- year low masks the severity of the slump in manufacturing as it includes a measure of supply chain delays, which boosted the index.”
He said the output and new orders gauges were better indicators. “These indices hint at production falling at the sharpest rate since 2009, dropping an annualised rate approaching double digits,” he said.
Gloom spread across the manufacturing sector in March. IHS Markit’s reading of sentiment fell to its lowest since records began eight years ago.
Rosie Colthorpe, European economist at consultancy Oxford Economics, said the PMI was consistent with “a very sharp eurozone recession in the first half this year”.
“The coronavirus lockdowns first hit the eurozone’s services sector, but manufacturers are now also suffering as supply-chain disruptions and the forced closure of non-essential activity hit production,” she said.
Stocks across Europe were lower as investors weighed the economic hit from coronavirus. The pan-European Stoxx 600 index was down 2.7 per cent, Germany’s Dax was 2.7 per cent lower and Italy’s FTSE Mib had fallen 1.6 per cent.