Corona-triggered Eurozone March Economic Collapse... PMI 51.6→31.4 (Summary)

Published 24 Mar.2020 18:47(KST)

Largest decline in a month since 1998
Service sector recession due to impact on travel, restaurants, and more

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] The Eurozone (19 countries using the euro) composite Purchasing Managers' Index (PMI) for March recorded 31.4, according to financial information firm IHS Markit. This is a sharp drop from 51.6 in February and falls short of experts' expectations (38.8).

In particular, the decline in the Eurozone composite PMI for March was the largest since mid-1998. A PMI above 50 indicates economic expansion, while below 50 indicates contraction.

As the novel coronavirus disease (COVID-19) spread across the European continent, the impact on the European economy began to appear in the indicators.

Especially, the service PMI showed a worse decline than manufacturing. The Eurozone service PMI plunged from 52.6 last month to 28.4, while the manufacturing PMI fell from 49.2 to 44.8. The service PMI was particularly hit due to concentrated damage in sectors such as travel, tourism, and restaurants.

IHS Markit explained, "Industrial activity in the Eurozone contracted significantly in March," adding, "Industrial activity appears more contracted than during the global financial crisis." Based on the March PMI, it is predicted that the quarterly gross domestic product (GDP) likely fell by about 2%.

They continued, "As governments took measures (such as movement restrictions) to prevent the spread of COVID-19, severe economic recessions appeared in other regions within the Eurozone, including France and Germany," adding, "The outlook remains bleak."

Meanwhile, Germany's composite PMI announced on the same day also plunged to 37.2 from 50.7 the previous month. In Germany, the service sector (34.5) was hit harder than manufacturing (45.7).