COVID-19: Eurozone economy suffered an "unprecedented" collapse

Euro slips as data points to historic crash in eurozone economy

As the negative impacts of the coronavirus are been felt every where, from lockdown people and businesses to curb the spread of the deadly virus, the eurozone economy suffered an "unprecedented" collapse according to the latest PMI index put out by analysis firm IHS Markit. AFP reported on Thursday.

"The eurozone economy suffered the steepest falls in business activity and employment ever recorded during April as a result of measures taken to contain the coronavirus outbreak," it said.

“The March PMI is indicative of GDP slumping at a quarterly rate of around 2pc, and clearly there’s scope for the downturn to intensify further as even more draconian policies to deal with the virus are potentially implemented in coming month,” said Chris Williamson, Chief Business Economist at IHS Markit.
The company's purchasing managers index (PMI) dived to a record low of 13.5 in April, from the previous all-time low of 29.7 in March, confirming the private sector gloom savaging the 19-nation eurozone.

Any reading below 50 signals a contraction. Finance ministers from the zone got a first reading of the potential impact of the coronavirus on the bloc’s economies today with the release of business confidence data.

The lowest score seen during the financial crisis was 36.2.

As one of the most up to date economic indicators investors, the PMI data lays bare the economic meltdown the euro area is suffering as countries such as Italy and Spain are battered by Covid-19.

Lockdown measures have forced businesses to close and caused demand to slump as would-be shoppers stay indoors and workers lose their jobs.

Data firm IHS Markit said the services sector was hardest-hit by coronavirus restrictions in April, with its PMI index crashing to just 11.7 from 26.4 in March.

Firms in accommodation, hospitality, restaurants, travel and tourism were rocked by a huge drop in demand for their services.

The coronavirus crash caused firms to lay off workers at the fastest pace on record. Service sector jobs were cut at the steepest rate since IHS Markit began recording the data, while factory jobs were cut at the fastest pace since 2009.

“April saw unprecedented damage to the Eurozone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,” said Chris Williamson, chief business economist at IHS Markit said.

Although stock markets have rebounded in recent weeks, pessimism among purchasing managers – those in charge of buying for their companies – fell in April.

Expectations of output slipped to a new record low. Williamson said this was “thanks to a new record degree of pessimism in manufacturing”.

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