Let’s look at the positive side first, the PMIs can’t fall much lower.
How can Europe cope with this? According to the preliminary results of IHS Markit’s survey of European purchasing managers, the composite purchasing managers‘ index is now only 13.5 points in April, down from 29.5 points in March. A historic low! The mood of service providers, who are particularly affected by restrictions, is darkening, and the manufacturing sector is also continuing to decline. Lockdowns, stand-offs, business closures and production shutdowns are literally choking off economic activity.
As a reminder, the Purchasing Managers‘ Indices actually point to an increase in overall economic production when values exceed 50 index points. We are currently far, far away from this in Europe. Two questions remain for the hope of improvement. How much longer will the shutdown last and can a second pandemic wave be prevented if the situation eases? Because if the Europe-wide shutdown can soon be eased sufficiently without the infection figures shooting through the ceiling again, it may be possible that the lights in the euro zone will not go out completely and the economic recovery will pick up speed again.
German purchasing managers are downright shocked. According to IHS Markit, the comprehensive composite purchasing managers‘ index fell from 35.0 to 17.1 points. The sentiment barometer for the service sector reached only 15.9 points, while the one for the manufacturing industry reached 34.4 points. All in all, these are all historically absolute lows.
In France, too, the economic downturn in sentiment has more than just worsened. It continues to fall unabated. The situation is somewhat worse than in Germany. After 27.4 points, the service index is now only 10.4 points! The mood in the manufacturing industry also darkened. According to the preliminary results, the composite index for France is at 11.2 points.