Eurozone Private Sector Registers Record Downturn In April

The euro area private sector experienced a record downturn in April due to the severe disruption caused by the coronavirus, or covid-19, pandemic, final survey results from IHS Markit showed Wednesday.

The composite output index slid to a new series low of 13.6 from March’s 29.7. The flash score was 13.5.

Both manufacturing and services reported record fall in output in April. The services Purchasing Managers’ Index sank to 12.0 from 26.4 in the previous month.

With a large part of the region shut down to contain the covid-19 infections, the economic data for April were inevitably going to be bad, but the scale of the decline is still shocking, Chris Williamson, chief business economist at IHS Markit said.

The survey data are indicative of GDP falling at a quarterly rate of around 7.5 percent, far surpassing the worst decline seen in the global financial crisis, Williamson added.

There was a steep and unprecedented drop in levels of new business placed with Eurozone companies. With levels of incoming new business down so sharply, companies reported accelerated fall in backlogs of work.

Job losses mounted in April, with overall employment down for a second successive month.

Further, business expectations were little-changed on March’s record low. Finally, prices data showed marked reductions in company operating costs and charges.

At the country level, Spain and Italy fared worst, followed by France. Germany posted the highest composite PMI figure.

Nonetheless, Germany’s composite output index posted a historic low of 17.4, down from the previous record of 35.0 in March and the flash reading of 17.1.

The services PMI came in at an all-time low 16.2 versus 31.7 in the previous month. The initial reading was 15.9.

France’s private sector contracted at the fastest pace in 22 years of data collection. The final composite index fell to 11.1 from 28.9 a month ago. Likewise, the services PMI plunged to 10.2 in April from 27.4 in March. This was also below the flash score of 10.4.

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