Coronavirus: Eurozone economy suffers record hit in March
The Eurozone economy suffered the biggest blow on record in March, survey data has shown, as coronavirus containment efforts all but stopped activity.
The IHS Markit purchasing managers’ index (PMI) – a closely watched gauge of the health of the euro area economy – crashed to 29.7 in March from 51.6 in February. A score below 50 indicates contraction.
The reading was notably worse than an initial March estimate of 31.4, which was then the worst on record. The final PMI reading is based on a larger number of survey responses, including more from later in the month.
Chris Williamson, chief business economist at IHS Markit said it is not surprising the final reading was worse than the so-called flash PMI as countries ramped up their measures to contain the spread of Covid-19.
He said the data suggests “that the Eurozone economy is already contracting at an annualised rate approaching 10 per cent, with worse inevitably to come in the near future”.
Italy and Spain’s economies crash
Italy was the worst-affected country. The PMI reading for the country’s dominant services sector collapsed to 17.4 in March from 52.1 in February. This was by far the biggest fall in activity on record.
Spain was also badly hit. Its composite PMI, which measures activity in the entire private sector, plunged to 26.7.
The dire readings are a harbinger of the biggest economic collapse since at least World War II.
There have now been more than 1m coronavirus cases around the world, with Europe one of the worst-affected regions.
Italy and Spain have been hotspots, with more than 10,000 deaths each. As the governments have tried to curtail the spread of Covid-19, all but essential economic life has stopped.
Katharina Utermohl, senior economist at trade credit insurer Euler Hermes, said: “There’s little doubt that the coronavirus pandemic has already tipped the eurozone into a sharp recession.”
“The pertinent questions now are how long the downturn will last, what damage limitation measures national governments and the European Central Bank implement and what the recovery, when it comes, looks like.”