Service sector activity crashed across Europe in March as coronavirus lockdowns caused purchasing managers’ indices to record their largest-ever monthly falls to levels suggesting severe economic contractions.
None of the leading European economies was immune to the economic pain, with Italy’s index falling to levels far below the worst point in the financial crisis 11 years ago. Spain, France and Germany 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 in the indices indicates that a majority of companies said activity of their businesses had declined over the past month. The figures do not have a direct bearing on economic growth although they are indicative of sharp contractions in output across Europe.
The Italian figures were the worst with a headline activity PMI measure in the services sector of 17.4, a plunge in the data that IHS Markit said was “likely to be felt for a long time to come”.
It also marked the steepest contraction registered by IHS Markit across any other country during the Covid-19 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.
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Italy’s figures were worst because it was the first European country to enter a strict lockdown, but other large European economies were 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.
Outside the eurozone, data from the UK painted a similar picture, with its index falling from 53.2 to 34.5.
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.”