- The eurozone’s private sector economy nosedived in April, with surveys from the region’s four largest powers shrinking to record lows far worse than those seen during the 2008 financial crisis.
- Reflecting the impact of ongoing restrictions to non-essential economic activities across the euro-region, both service and manufacturing activity levels contracted sharply for France, Italy, Germany, and Spain.
- “The economic data for April were inevitably going to be bad, but the scale of the decline is still shocking,” said Chris Williamson, chief business economist at IHS Markit.
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Economies in Europe swooped to new lows in April, as business surveys from four of the greatest powers of the region reflected declining levels of activity in the service and manufacturing sectors.
IHS Markit’s Eurozone Composite Purchasing Managers Index (PMI) posted a bleak reading of 13.6 in April, down from 29.7 in March.
The PMI is a measure that tracks the economic direction of business trends in the economy. A reading of 50 indicates a neutral or stabilised level of growth, above 50 exhibits expansion, and below 50 implies stagnation.
Ordinarily, during economic downturns readings as low as 45 can be expected, while PMIs hover in the mid-50s range during expansion.
IHS Markit’s Eurozone Service Business Activity PMI Index sank to 12.0 in April, substantially down from 26.4 in March. The data confirmed the picture painted by a series of flash PMIs last week.
Countries ranked by IHS Markit’s Composite PMIs recorded for April 2020:
- Germany: 17.4 versus 35.0 in March
- France: 11.1 versus 28.9 in March
- Italy: 10.9 versus 20.2 in March
- Spain: 9.2 versus 26.7 in March
“With a large part of the region’s economy shut down while COVID-19 infections spiked higher, the economic data for April were inevitably going to be bad, but the scale of the decline is still shocking,” said Chris Williamson, chief business economist at IHS Markit, in a statement.
“While the rate of decline may ease in coming months, we do not expect to see any material signs of recovery until the second half of the year, and it is likely to be several years before the output lost due to the virus outbreak is fully regained,” he concluded.
The PMI data came on the same day that the European Commission said it expects European Union GDP to shrink by 7.4% in 2020 as a result of the virus.
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