Eurozone economic activity collapsed in March as the coronavirus pandemic is causing worldwide chaos. The disease has resulted in shops, restaurants, and offices rolling down.
March 26, 2020 | SQUARED DIRECT – According to an IHS Markit’s survey, the PMI for the Eurozone, which reflects the state of its economy, plunged to a record low of 31.4 points from 51.6 points in February. This is by far the largest monthly decline since mid-1998 in this survey.
Eurozone Economic Activity Plunges
The index was lower than all Reuters estimates, with an average forecast of 38.8 points.
“Business activity across the eurozone collapsed in March to an extent far exceeding that seen even at the height of the global financial crisis,” said Chris Williamson, chief business economist at IHS Markit.“Steep downturns were seen in France, Germany and across the rest of the euro area as governments took increasingly tough measures to contain the spread of the coronavirus,” he said.
All of the sub-indicators of the survey were below the 50-point threshold. This marks the turning point between growth and contracting activity. With new jobs hit hard, the index fell to 29.5 out of 51, 2 units.
“The March PMI is indicative of GDP slumping at a quarterly rate of around 2%, and clearly there’s scope for the downturn to intensify further as even more draconian policies to deal with the virus are potentially implemented in coming months.” Williamson said.
The largest service activity contracted at the highest rate in the history of the survey, with the PMI index sinking to 28.4 from 52.6 points. Businesses have been focusing on lowering prices for the first time in more than three years. On the other hand, the optimism index has fallen to its lowest level. The business expectations index stood at 34.8 points from 61.3 points in February.
Related: Will the Eurozone Economy Rebound?
Factories hit the worst, with the PMI falling 44.8 from 49.2 points – the lowest level since July 2012. This, however, is higher than expectations in a Reuters survey. The manufacturing index fell to 39.5 from 48.7 points, the lowest level since April 2009. Factories across the Eurozone have cut staff, restricted stocks of raw materials and completed unfulfilled orders, as demand dipped. The new orders index fell to 38.2 from 49.4 points in February, nearly 11 years low.
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