Factories across Europe have suffered their bleakest month in decades as the coronavirus crisis has wreaked havoc with supply chains, production and demand, new figures show.
A closely watched survey on Monday laid bare how the pandemic and state lockdowns to contain the virus have hammered manufacturing across the eurozone.
It shows manufacturing employment levels dropped in April at the fastest rate since 2009. Output, new orders, exports, and purchasing activity all plunged at record rates, and confidence hit its lowest level on record.
The headline figure on the purchasing managers’ index (PMI) for eurozone manufacturers, published by data provider IHS Markit, came in at 33.4 in April, lower than a previous flash estimate. It marks the worst figure since the survey began in 1997, with a record number of firms reporting declining activity.
Figures above 50 on the index show most firms are reporting an expansion of production, while figures below 50 show most firms are contracting. The representative survey of more than 3,000 eurozone manufacturers is widely followed as a proxy for the health of the sector on the continent.
PMI data at a country level shows France, Greece, Italy and Austria all suffered their worst month on record overall, while Germany and Spain saw their worst month since the global financial crisis.
Italy, which has Europe’s highest death toll from the virus, saw the steepest monthly drop in output. PMI figures for UK factories last week made for similarly grim reading.
"Euro area manufacturing output plunged to an extent greatly exceeding any decline previously seen in the near 23-year history of the PMI survey in April,” said Chris Williamson, chief business economist at IHS Markit.
He said widespread factory closures, supply chain disruption and a steep decline in demand had all hurt the sector since the COVID-19 outbreak began.
But he added: “With virus curves flattening and talk now moving to lifting some of the pandemic restrictions, April will have hopefully represented the eye of the storm in terms of the virus impact on the economy, meaning the rate of decline will now likely start to moderate.”
Manufacturing firms had already been struggling with weak growth, partly down to a cooling of demand in China, throughout 2019 before the virus hit.
Employment levels have fallen every month for the past year. But the rate of decline in April marks the sharpest since April 2009, with job losses particularly heavy in Greece, Ireland and Spain.