Business activity in Britain and the eurozone has plunged to the lowest levels since the start of closely watched surveys more than two decades ago, as the coronavirus crisis triggers a deep recession and widespread job losses.
The latest snapshot from the purchasing managers indices (PMI) revealed the early extent of the damage in March as countries around the world imposed lockdowns to contain the spread of the disease, triggering the sharpest decline in private sector activity since the survey records began 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 onset of job losses last month as the government in effect shut down large swathes of the economy.
The PMI reading for manufacturing and service sector output, making up the vast majority of UK growth, crashed to 36.0 in March on a scale where anything above 50.0 separates growth from contraction. The index was below the initial “flash” estimate made in late March as more survey data came in later in the month amid the onset of lockdown measures. The collapse in the PMI, down sharply from 53.0 in February, was the worst reading since records began in 1996.
Duncan Brock, group director at Cips, said: “It’s increasingly difficult to find the words to describe the devastation as every region in the world fights to save human life as the first priority. The likelihood of a global recession is now a given, though its duration and severity has yet to reveal itself.”
British companies said emergency government support to furlough staff had helped prevent more widespread job losses in March. However, employment in the services sector – which includes restaurants, hotels and the City – dropped at the fastest pace for more than a decade.
Reflecting international travel restrictions and widespread business closures across Europe, companies said existing projects had been placed on hold and new inquires from abroad had virtually ceased.
Surveys of factory output and service sector activity in eurozone also revealed the biggest ever single monthly fall in March, setting the currency bloc on course for a deep recession.
The IHS Markit eurozone composite PMI, which combines manufacturing and service sector activity, plunged to 29.7, below the flash reading and significantly down on the 51.6 level recorded in February before Covid-19 struck Europe. The PMI was the worst since the eurozone survey began in 1998.
“In one line: horrid, hideous, harrowing … you get the picture,” said Claus Vistesen, chief eurozone economist at the consultancy Pantheon Macroeconomics. “We are struggling to come up with words to describe these numbers, which are now so far out of any reasonable range that they are difficult to interpret.”