Global Manufacturing and Service Industry Outlook Worst in 11 Years... 'Corona Shock'

by Kim Dongpyo

Published 19 Apr.2020 10:02(KST)

On the 13th (local time), when the cumulative death toll from the novel coronavirus disease (COVID-19) in New York State, USA, surpassed 10,000, the Wall Street area in New York City, where the New York Stock Exchange (NYSE) is located, was deserted and empty amid rain.

The manufacturing and service industry outlook has fallen to its worst level in 11 years, according to a survey. This is due to the impact of the novel coronavirus disease (COVID-19).

On the 19th, market research firm IHS Markit reported that the global composite Purchasing Managers' Index (PMI), which reflects both manufacturing and service sectors, dropped to 39.4 in March, the lowest since February 2009 during the global financial crisis.

The global composite PMI fell sharply for two consecutive months, declining from 52.2 in January to 46.1 in February this year.

The PMI is an indicator gauging economic trends based on surveys of purchasing managers at companies; a value above 50 indicates economic expansion, while below 50 indicates contraction.

The global composite PMI is calculated by weighting the manufacturing PMI and service PMI, which are derived from surveys of purchasing managers in manufacturing and service sectors at over 27,000 private companies across about 40 countries, according to each country's situation.

Last month, the global service PMI plunged more than 10 points from 47.1 in February to 37.0 in March, marking the largest drop in 22 years since the survey began in 1998.

However, the global manufacturing PMI slightly rose from 47.1 in February to 47.6 in March, as China, which experienced COVID-19 earlier and resumed economic activities, showed improvement. Excluding China, the global manufacturing economy contracted at the steepest rate since April 2009.

By industry, 25 out of 26 sectors, except for the beverage and food sector, were in a contraction phase.

In particular, the PMI for 10 sectors including tourism and leisure, real estate, transportation, media, industrial services, telecommunications services, banking, insurance, software and services, and healthcare recorded their lowest levels since data collection began in October 2009.

Meanwhile, the global consumer confidence index for April, compiled by polling firm Ipsos, was 44.4, the lowest since December 2012.

This index is a consumer sentiment index calculated by Ipsos through monthly surveys since March 2010 of consumers in 24 countries regarding their perception of the current economic situation and outlook. A score above 50 indicates consumer sentiment is better than usual, while below 50 indicates worse sentiment.

By country, South Korea's index fell from 38.8 in March to 37.1 in April, ranking 19th out of 24 countries, following China (65.2), the United States (55.1), Germany (49.5), and France (41.2).