Eurozone output and employment suffer record falls in April
The Eurozone economy suffered the biggest falls in employment and activity on record in April as governments across the continent all but shut down their countries in response to the spread of coronavirus.
The IHS Markit composite purchasing managers’ index (PMI) – a closely watched gauge of activity – collapsed to 13.5, the lowest score since records began over two decades ago.
The reading was well below last month’s score of 29.7, which was itself a record low. A score of under 50 indicates contraction. 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”.