But with businesses shuttered across the region, Purchasing Managers’ Indexes compiled by IHS Markit slumped to record lows in March and suggested it could be months before things returned to any semblance of normalcy.
A final composite PMI for the euro zone plummeted to a record low of 29.7 from February’s 51.6, lower than the flash reading of 31.4 and marking by far its biggest onemonth drop since the survey began in July 1998. The 50 mark separates growth from contraction. “It’s clear that the economy is contracting more quickly than ever before during peacetime,” said Jack Allen-Reynolds at Capital Economics.
“We think that GDP across the euro zone will fall even more quickly in Q2 than the surveys suggest. We estimate that while lockdowns are in place, output will be at least 25% below its normal level.”
IHS Markit said the data indicated the economy was already contracting at an annualised rate approaching 10% and warned worse was to come in the near future. That was borne out by the survey as demand for new business fell at the fastest rate on record.
Like its manufacturing counterpart, activity in the bloc’s dominant service industry has also almost ground to a halt, with travel, tourism, restaurants and other leisure activities all hit hard by virus containment measures.
With the lockdowns likely to last for some time, optimism all but dried up.
