The IHS Markit Purchasing Managers’ Index, which measures both the services industry and manufacturing, dropped to 13.5 in April, according to preliminary data. In March, the same index had already recorded its biggest ever single monthly drop to 29.7. A contraction in PMI numbers — a figure below 50 — indicates a likely fall in economic growth overall.
Euro zone countries have been some of the hardest hit by the virus, with Italy, Spain, France and Germany among the top five nations worldwide with the highest number of infections. Most European governments introduced lockdown measures to contain the spread of the virus. As a result, their economies were brought to a standstill, with restaurants, shops, movie theaters and other services closed to the public.
The International Monetary Fund (IMF) has forecast a 7.5% contraction for the euro zone in 2020. Earlier in the session, Germany’s flash index came in at 17.1, a record low, versus a figure of 35.0 the month before. This was worse than analysts had been expecting with Phil Smith, principal economist at IHS Markit, saying it “paints a shocking picture of the pandemic’s impact on businesses.”