Eurozone Manufacturing Activity Shrinks On Covid-19 Outbreak
01 April 2020 - 3:41PM
RTTF2
Eurozone manufacturing activity contracted at the fastest pace
in more than seven years in March as the outbreak of coronavirus,
or covid-19 weighed on orders, output, employment and confidence,
final data from IHS Markit showed on Wednesday.
The final factory Purchasing Managers' Index fell to 44.5 from
49.2 in February. The reading was also below the flash estimate of
44.8.
The score has remained below 50.0 for fourteen consecutive
months and reached its lowest level in 92 months.
The survey showed that covid-19 related shutdowns pulled down
output and orders in March. The deterioration in manufacturing
output was the greatest since April 2009. Similarly, new orders
deteriorated to a degree unsurpassed for just under 11 years.
Manufacturers continued to face significant obstacles in
securing supplies. The average lead times deteriorated to the
greatest degree in nearly 23 years of data collection.
Firms reduced their holdings of both input and finished goods in
order to increase working capital. Further, manufacturers cut their
employment levels at the sharpest pace in over a decade.
There was a marked decrease in input costs due to fall in raw
material prices. Output charges also fell to the greatest degree
recorded by the survey for four years.
Reflecting concerns over the short- and long- term impacts of
the covid-19 pandemic, business sentiment logged its biggest
monthly fall on record.
"The concern is that we are still some way off peak decline for
manufacturing," Chris Williamson, chief business economist at IHS
Markit said.
Besides the hit to output from many factories simply closing
their doors, the coming weeks will likely see both business and
consumer spending on goods decline markedly as measures to contain
the coronavirus result in dramatically reduced orders at those
factories still operating, Williamson added.
At country level, Italy posted the sharpest deterioration in
operating conditions, with the respective PMI hitting the lowest in
nearly 11 years. The PMI plunged to 40.3 in March from 48.7 in
February.
France's final factory PMI declined to 43.2 from 49.8 in
February. The flash reading was 42.9. The final score signaled the
sharpest fall since January 2013.
The progression of the covid-19 outbreak into a pandemic saw the
downturn in Germany's manufacturing sector deepen in March. The
manufacturing PMI came in at 45.4, down from a 13-month high of
48.0 a month ago and below the flash 45.7.
Spain's operating conditions deteriorated to its lowest level in
nearly seven years in March. The PMI dropped to 45.7 from 50.4 in
February.
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