Latest Snapshot of Purchasing Managers’ Index (PMI) Revealed Early Damage In March As Countries Around The World Imposed Closures To Contain The Spread Of Disease, Triggering The Biggest Drop In Activity in the private sector since the start of the survey recordings in the late 1990s.
The latest health check in Britain from IHS Markit and the Chartered Institute of Procurement and Supply (Cips), which is closely monitored by the Treasury and the Bank of England, revealed the start of job losses this month last when the government actually shut down large swathes of the economy.
The PMI reading for manufacturing and services output, which makes up the vast majority of British growth, fell to 36.0 in March at a scale where everything above 50.0 separates growth from contraction. The index was below the initial “flash” estimate made in late March, as more survey data arrived later in the month at the start of the foreclosure measures. The PMI collapse, down sharply from 53.0 in February, was the worst reading since the records started in 1996.
Duncan Brock, group director at Cips, said: “It is getting harder and harder to find the words to describe the devastation as every region of the world fights to save human life as a top priority. The likelihood of a global recession is now a given, although its duration and severity have not yet been revealed. “
British companies said emergency government aid to staff on leave helped prevent more widespread job losses in March. However, employment in the service sector – which includes restaurants, hotels and the city – has fallen at the fastest rate in more than a decade.
Due to restrictions on international travel and large-scale business closings in Europe, the companies said existing projects have been put on hold and new inquiries from abroad have virtually stopped.
Surveys of factory output and service sector activity in the euro area also revealed the largest monthly decline ever in March, putting the money bloc on the road to a deep recession.
The composite PMI for the euro zone IHS Markit, which combines activity in the manufacturing and services sectors, plunged to 29.7, below the flash reading and down significantly to the level of 51.6 recorded in February before Covid-19 never hits Europe. The PMI was the worst since the start of the euro area survey in 1998.
“In one line: horrible, hideous, heartbreaking … you get the picture,” said Claus Vistesen, chief eurozone economist with Pantheon Macroeconomics. “We are struggling to find words to describe these numbers, which are now so far from any reasonable range that they are difficult to interpret. “