The coronavirus pandemic caused the biggest collapse in Eurozone business activity ever recorded in March, preliminary survey data has shown, in an early sign of the havoc the virus is wreaking on European economies.
IHS Markit’s Eurozone purchasing managers’ index (PMI), a closely watched gauge of private sector output, crashed to 31.4 in March from 51.6 in February. The figure, well under the 50 no-change mark, indicates a huge contraction in the economy.
Chris Williamson, chief business economist at IHS Markit said: “Business activity across the Eurozone collapsed in March to an extent far exceeding that seen even at the height of the global financial crisis.”
Output in Germany and France, the euro area’s two biggest economies, plunged in March. The French private sector slumped to a record low after the domestic economy was all but shut down and normal life suspended due to the coronavirus outbreak.
In Germany, services sector output crashed to a record low. This drove private sector output as a whole to its lowest level since 2009.
IHS Markit’s France purchasing managers index (PMI) – a gauge of private sector performance – fell to 30.2 in March from 52.0 in February. This was a record low and far undershot analysts’ average forecast of 39.8. A score of under 50 indicates contraction.
The German private sector PMI plunged from to 37.2 in March from 50.7 in February, its lowest since February 2009. The services sector crashed to 34.5, the lowest on record.
Economists that helped compile the surveys said the preliminary data indicated the Eurozone’s two biggest economies are set for deep contractions.
“The latest PMI data revealed dismal results for the French private sector, with coronavirus-driven shutdowns leading to widespread economic disruption,” said Eliot Kerr, economist at IHS Markit.
Phil Smith, principal economist at HS Markit, said: “The unprecedented collapse in the PMI underscores how Germany is headed for recession, and a steep one at that.”
Although the survey data showed manufacturing held up relatively well in France and Germany in March, IHS Markit said things were in fact worse than the statistics suggested.
“The downturn in manufacturing has also deepened,” Smith said. “The underlying data for manufacturing output and neworders are some of the worst we’ve seen over the past decade.”