Eurozone economy crashes at fastest pace on record
The Eurozone private sector suffered its worst month on record in April as coronavirus lockdown measures caused consumer demand to all but evaporate, survey data has confirmed.
The closely watched IHS Markit composite purchasing managers’ index (PMI) plunged to 13.5 in April from 29.7 in March, which was the previous record low.
A score of below 50 indicates contraction, with anything below 30 previously unheard of in the survey’s more than 20-year history. During the financial crisis, the gauge dipped to 36.2.
Chris Williamson, chief business economist at data firm IHS Markit, said: “The ferocity of the slump has also surpassed that thought imaginable by most economists, the headline index falling far below consensus estimates.”
“Our model which compares the PMI with GDP suggests that the April survey is indicative of the eurozone economy contracting at a quarterly rate of approximately 7.5 per cent.”
April’s crash was driven by the services sector. The services PMI gauge slumped to 11.7, a record low, from 26.4 in March.
Firms in hospitality, travel, tourism and restaurants felt the brunt of the pain. Vast numbers of them have been either closed completely or operating severely reduced services during the lockdowns.
In a sign that the Eurozone’s businesses doubt the economy will quickly rebound, the expectations gauge fell slightly to a new all-time low.
Meanwhile, companies laid off workers at the fastest pace in the history of the survey. Again, the services sector was the worst-hit.
Williamson said that even with Eurozone economies reopening, “progress looks set to be painfully slow to prevent a second wave of infections”.