Latest data released by Markit/BME - 24 March 2020
- Prior 48.0
- Services PMI 34.5 vs 43.0 expected
- Prior 52.5
- Composite PMI 37.2 vs 41.0 expected
- Prior 50.7
Sharp drops for the services and composite readings with the former falling to a record low while the latter hits a 133-month low, helped out by a deceiving manufacturing headline print once again. Think back to my post last month here.
Looking past the manufacturing headline print, output fell sharply at its joint-fastest rate since early 2009 while firms' order book volumes also fell heavily amid demand disruption.
On the supply disruption artificially boosting the headline manufacturing print:
As such, this is actually a really poor report as we now see French and German economic activity collapse strongly on the back of the virus outbreak across Europe.
Markit notes that:
"The unprecedented collapse in the PMI underscores how Germany is headed for recession, and a steep one at that. The March data are indicative of GDP falling at a quarterly rate of around 2%, and the escalation of measures to contain the virus outbreak mean we should be braced for the downturn to further intensify in the second quarter.
"The service sector has so far borne the brunt of the government's measures to stem the spread of COVID-19, with activity falling to the greatest extent in almost 23 years of data collection, and at a rate that already far surpasses anything seen even during the depths of the global financial crisis.
"The downturn in manufacturing has also deepened, and the situation is much worse than the headline PMI suggests. The supply-side disruption is causing the delivery times and stocks of purchases components to move in the opposite direction to what we'd usually expect during a downturn, thereby artificially boosting the PMI. The underlying data for manufacturing output and new orders are some of the worst we've seen over the past decade, though not as bad as the service sector."
