Eurozone Business Activity Falls To Record Low
The coronavirus and the quarantine in European countries have crushed the Eurozone business activity index. There has been no such falls even after the last global financial crisis.
Business activity in the Eurozone in March fell to 31.4 points from 56.1 points in February, follows from the new release of the Purchasing Managers Index (PMI Index), which was presented by the consulting company IHS Markit. This is the biggest drop in business activity for a month since July 1998, when the company began to calculate the index, the document says. The previous record was set in February 2009 – after the global financial crisis.
“Although growth accelerated slightly in the first two months of the year, in March there was an extensive shock for business from increasingly stringent measures to limit the spread of coronavirus. The service sector has suffered the most, especially consumer-dependent areas such as tourism, travel and restaurants. <…> Production faced a less severe but equally steep decline,” the IHS Markit report reads.
In March, there was a supply chain disruption, the worst one since May 2000. Previously, supply constraints resulted in higher prices because demand exceeded supply, but in March, industrial prices fell to a minimum of four years because companies offered discounts to increase sales and reduce inventory, the company said.
“Business activity in Europe fell in March much more significantly than it was even at the peak of the global financial crisis. <…> The business activity index in March indicates a quarterly decline in GDP of about 2%, and, obviously, the decline may increase even more if draconian measures to combat the virus are taken in the coming months. <…> Employment is already falling at a pace unprecedented since July 2009, as despair is growing because of prospects,” wrote Chris Williamson, chief business economist at IHS Markit.