'Truly horrifying': 6 economic surveys show coronavirus is hammering the global economy

Brendan McDermid/Reuters

  • Coronavirus is hammering economic activity and threatening global growth, according to survey data from five countries and the eurozone published on Tuesday.
  • Flash composite Purchasing Managers Index (PMI) readings plunged to record lows in France, Germany, the UK, and the eurozone, signalling stark declines in manufacturing and service activity.
  • “The COVID-19 depression has arrived,” one analyst said.
  • Japan’s services PMI suffered its fastest monthly drop since data collection began in 2007, and Australia’s services PMI also fell sharply.
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Coronavirus is starting to hammer economic activities and choke global growth, surveys of purchasing managers in five countries and the eurozone revealed on Tuesday.

The flash readings from IHS Markit in Europe, au Jibun Bank in Japan, and Commonwealth Bank in Australia indicate that economies are grinding to a halt as the pandemic forces factories to cut back or close and consumers to stay at home to slow transmission.

A purchasing managers’ index (PMI) figure above 50 signals expansion, while a number below 50 suggests contraction. Flash readings are based on about 85% of total survey responses each month, making them a reliable indicator of final PMI readings.

Here’s a roundup of the six surveys:

  • In France, manufacturing output tumbled from 49 in February to an 11-year low of 35.6, and services activity dropped from 52.6 to 29. Composite PMI – the weighted average of the two readings – plunged from 51.9 to 30.2, suffering its sharpest decline in nearly 22 years of data collection.
  • “These are truly horrifying numbers, indicating that the domestic economy all but shut down at the end of the first quarter,” Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said in a research note.
  • In Germany, manufacturing output dropped from 47.3 to 42.2, a seven-year low. Services activity plummeted from 52.6 to 28.4, a record low. Composite PMI also fell from 51.6 to a record low of 31.4.
  • “Another dreadful set of numbers,” Vistesen said, describing them as “grim.”
  • In the UK, manufacturing output slid from 52.2 to a seven-year low of 44.3. Services slumped from 53.2 to 35.7, a record low. As a result, composite output fell from 53 to a record low of 37.1.
  • “Very disappointing,” Neil Birrell, investment chief at Premier Miton, said in a morning note. “The economy was in rapid decline even before the lockdown announced last night.”
  • In the eurozone – which includes Italy and Spain – manufacturing output slumped from 48.7 to almost an 11-year low of 39.5. Services activity tumbled from 52.6 to 28.4, a record low. Composite output also hit a record low, falling from 51.6 to 31.4.
  • “The COVID-19 depression has arrived,” Vistesen said. “The domestic economy has been forced to a near-standstill by the efforts to contain the virus.”
  • “The region is in a steep economic downturn and a recession is coming,” Birrell said.
  • In Japan, manufacturing PMI fell from 47.8 to 44.8. Services activity fell from 46.8 to 32.7, the fastest drop since data collection began in 2007. Composite output slumped from 47 to 35.8.
  • In Australia, manufacturing PMI was almost flat at 50.1, but services PMI fell from 49 to 39.8. Composite PMI dropped from 49 to 40.7.

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