Eurozone Factory Sector Contracts At Record Pace

The euro area manufacturing sector contracted at a record pace in April as government restrictions to limit the spread of the global coronavirus, or covid-19, pandemic weighed on activity, final survey results from IHS Markit showed Monday.

The final Purchasing Managers’ Index fell to 33.4 from 44.5 in March. The score was also below the flash estimate of 33.6.

The score was the lowest ever recorded by the series, surpassing readings seen during the depths of the global financial crisis.

Output, new orders, export sales, and purchasing activity all fell at record rates due to a combination of factors such as widespread factory closures, slumping demand and supply shortages amid covid-19.

Confidence about the future sank to a fresh series low. At the same time, the rate of contraction in employment was the sharpest since April 2009.

Both output and input prices declined markedly in April.

“With virus curves flattening and talk now moving to lifting some of the pandemic restrictions, April will have hopefully represented the eye of the storm in terms of the virus impact on the economy, meaning the rate of decline will now likely start to moderate,” Chris Williamson, chief business economist at IHS Markit, said.

At the country level, PMIs were down across the region, with numbers either at record lows or registering readings only surpassed during the worst of the global financial crisis.

Germany’s IHS Markit/BME manufacturing PMI fell to 34.5 from 45.4 in March. Though the lowest since March 2009, this compared with a reading of 19.7 for the survey’s output index. The flash reading was 34.4.

France’s factory activity shrank at a record pace in April driven by fresh record lows for production and new business as well as a drastic reduction in employment. The PMI slid to 31.5 in April, as initially estimated, from 43.2 in March.

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