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NEWS: JPMorgan’s March global services PMI falls to 37.0 from 47.1 April 03, 2020 at 05:06PM

fcfx

It’s an amalgamation of many PMIs
The US number held but today but that’s an illusion for the moment. Globally there are some incredible drops but the April numbers are going to be downright dire.

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‘A taste of things to come’: Italian services activity plunges to 11-year low as national lockdown weighs

italian police
Italian Carabinieri pose in front of St. Peter’s Basilica as a Carabinieri helicopter flies overhead, in Rome November 12, 2014.
Alessandro Bianchi/Reuters

Italy’s service sector ground to a virtual halt in March, reflecting the strict national lockdown imposed by the government to contain the coronavirus outbreak.

IHS Markit’s Purchasing Managers Index (PMI) reading for Italian services fell by nearly 35 points in March to 17.4 — an 11-year low — as activity slumped compared to February. A reading above 50 indicates an expansion in activity, while a reading below 50 suggests a contraction.

Italian businesses, part of the respondents to the survey, on Friday reported their fastest contraction on record with the quickest rate of job shedding in more than 22 years of data collection.

Chris Williamson, chief economist at IHS Markit, said Italy’s services PMI fell to the lowest level of any comparable survey at his firm in March and signaled that this was a “taste of things to come for other countries as lockdowns intensify.”

IHS Markit’s related index for Italian manufacturing activity, released on Wednesday, fell from 48.7 in February to 40.3 in March — a modest decline compared to the services sector.

The services reading indicates an “extremely challenging time for the Italian economy” as it’s the lowest number recorded since the global financial crisis, IHS Markit said.

Prior to the Covid-19 outbreak, Italy’s economy was already wobbling in the fourth quarter of 2019 with its gross domestic product contracting by 0.3%.

Lewis Cooper, an economist at IHS Markit, expects the impact to be felt for a long time as “sentiment with regards to activity over the coming 12 months plummeted to the lowest level on record.”

More positively, analysts at Bank of America say the spread of Covid-19 is slowing and lockdowns should be eased from the middle of the second quarter.

Relaxing containment measures could allow for improvement in services activity, but BofA analysts still assume that Euro area PMIs will remain below 50 until August, they said in a research note on Friday.

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Economic activity crashes across Europe after coronavirus lockdowns Severe contraction likely as Italy, Spain, France and Germany business surveys see largest monthly falls A man walks past a closed restaurant following Italy’s lockdown due to the coronavirus emergency, in Milan, Italy Italy saw its service sector activity plunge to a level that IHS Markit said was ‘likely to be felt for a long time to come’ © Luca Bruno/AP Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Chris Giles and Valentina Romei 9 hours ago Print this page 155 Be the first to know about every new Coronavirus story Service sector activity crashed across Europe in March as coronavirus lockdowns caused a series of widely watched business surveys to record their largest-ever monthly falls to levels that suggest a severe economic contraction is under way. None of the leading European economies was immune to the economic pain. Italy’s purchasing managers’ index fell to levels far below the worst point in the financial crisis 11 years ago. Spain, France and Germany all recorded the lowest reading in their respective surveys since they started more than 20 years ago. For the eurozone as a whole, the composite PMI index of services and manufacturing, compiled by IHS Markit, dropped from a reading of 51.6 in February to only 29.7 in March, the lowest reading since the survey began 22 years ago. Any level below 50 indicates that a majority of companies said activity in their businesses had declined over the past month. Paul Smith, economics director at IHS Markit, said: “The March survey laid bare the scale of the Covid-19 pandemic and associated effort to contain the outbreak, with services companies registering unprecedented falls in activity, new work and confidence.” Nicola Nobile of Oxford Economics said the economies in the bloc faced an “extremely challenging situation”, highlighting the need for a rapid co-ordinated policy response across the eurozone. Outside the eurozone, data from the UK painted the same picture; its index fell from 53.2 to 34.5. Even in Sweden, service sector activity was hit almost as hard as in other European countries, but from a higher base, falling from 56.9 to 36.8 with big hits to consumption, leisure and travel. Lisa Alexanderson, senior economist at JPMorgan, said the “hit to activity is thus as large as elsewhere despite less draconian restrictions in Sweden”, suggesting the economic consequences of the virus cannot be avoided even if governments allow the virus to spread more freely. The plunge in the indices suggested economies would contract faster in the second quarter of 2020 than they did in the financial crisis of 2008-09. Jack Allen-Reynolds at Capital Economics said “while lockdowns are in place, output in the eurozone will be at least 25 per cent below its normal level”, indicating in 2020 as a whole “we think that gross domestic product will fall by about 9 per cent”. The Italian figures were the worst with a headline services activity reading of 17.4, a plunge that IHS Markit said was “likely to be felt for a long time to come”. Line chart of purchasing managers’ index, below 50= a majority of businesses reporting a contraction showing eurozone’s services activity has crashed It also marked the steepest contraction registered by IHS Markit across any other country so far in the crisis. Italy’s companies reported the fastest contraction in new business on record, and they expect activity to fall further in the year ahead. The rate of job losses was the quickest since April 2009. Italy was the first European country to enter a strict lockdown, but other large European economies have been hit almost as hard. In France the services PMI fell to 27.4 in March from 52.5 in February. Germany saw an equivalent decline in its index from 52.5 to 31.7 and Spain suffered a drop from 52.1 to 23.0. Coronavirus business update How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter. Sign up here In Britain, the drop in activity accelerated during March and by the end of the month was below the level of the financial crisis. Samuel Tombs, UK economist at Pantheon Macroeconomics, said the data towards the end of the month was much worse than at the beginning, suggesting April’s numbers would be even worse. The figures, he said, were “horrendous and probably not reflecting the full devastation” in the UK economy to come in the months ahead. No country is immune from the economic damage. On Friday the chief economist of Ireland’s central bank predicted unemployment was on track to rise to 25 per cent by the summer. Mark Cassidy said near-term prospects for the largely services-driven Irish economy were “very unfavourable”.

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