'Grim' Data Offers First Glimpse Into Coronavirus Impact in Europe. The Whole Picture Will Be Much Worse. -- Barrons.com
DOW JONES & COMPANY, INC. 8:23 AM ET 3/24/2020
Business activity, unsurprisingly, plunged in the U.K. and across Europe in March, as a raft of economic data offered a glimpse into the impact of coronavirus.
The pandemic caused the largest collapse in business activity ever recorded in the eurozone, according to the closely-followed IHS Markit purchasing managers index (PMI).
The composite PMI, which combines the services and manufacturing sector, fell from 51.6 to a record low of 31.4 in March -- a level of 50 indicates no change, below 50 indicates a contraction in activity. The previous low was 36.2 in February 2009.
Italy -- one of the bloc's major economies -- has been on lockdown for most of March, while Spain, Germany and France have since imposed lockdowns of their own. French business activity contracted at its sharpest rate in the survey's 22-year history, while German activity fell at a slower pace but still its worst since February 2009.
The eurozone's services sector was worse hit than manufacturing, with consumer-facing industries such as travel, tourism and restaurants the worst affected.
Read: Coronavirus Cases Are Growing at An Accelerating Rate
ING's senior economist Bert Colijn described the eurozone data as "grim" but said it still doesn't reveal the depth of the pandemic's economic fallout. He added that more restrictive numbers came into force after the survey was conducted, meaning the real picture was even worse.
"It also doesn't tell us much about the depth of the decline, because the PMI is a diffusion index which measures the amount of companies facing a deterioration in activity, not the depth of it.
"Nevertheless, the PMI paints a picture of an economy that has ground to a halt," Colijn said.
In the U.K., where a national lockdown was imposed late on Monday, the fall was less severe but the combined monthly decline in output across manufacturing and services was still a record low -- dropping from 53 to 37.1. The manufacturing sector remained resilient, falling to just 48 in the index, while the services sector fell to 35.7.
The bank's developed markets economist James Smith said the U.K.'s sharp fall most likely understates the short- term gross domestic product loss to come.
Looking ahead. As Colijn points out, the PMIs don't tell us just how deep the impact of coronavirus will be, but the March data is ugly. More worryingly, France and Germany -- and certainly the U.K. -- seem to be at the beginning of lengthy lockdown periods. With a number of measures and support packages launched by European countries to protect businesses and jobs, we will soon see whether enough is being done to mitigate the potentially devastating economic impact.
(END) Dow Jones Newswires
03-24-200823ET
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