LONDON (1) – Coronavirus hit Britain’s economy in April with extra drive than even probably the most pessimistic forecasters had feared as companies reported a historic collapse in demand throughout a nationwide lockdown, a survey confirmed on Thursday.
FILE PHOTO: Staff are seen because the solar units behind a development web site in London, Britain, January 21, 2020. REUTERS/Henry Nicholls/File Picture
The IHS Markit/CIPS Flash UK Composite Buying Managers’ Index (PMI) fell to a brand new document low of 12.9 from 36.0 in March – not even shut to the weakest forecast in a 1 ballot of economists that had pointed to a studying of 31.4.
It was the same image in France and Germany. [EUR/PMIS]
The dimensions of the collapse in Britain’s PMI all however ensures an enormous contraction in the world’s fifth-largest economy and can add to doubts about whether or not monetary assist from the federal government has reached companies rapidly sufficient.
“Like these throughout Europe, these are stunning figures,” mentioned ING economist James Smith, who predicts it would 2022 on the earlier till Britain’s economy recovers its pre-outbreak dimension.
(GRAPHIC: UK providers PMI falls to new document low of 12.3 – right here)
IHS Markit mentioned the dire readings will inevitably elevate questions on the price of the lockdown and the way lengthy it would final.
The figures on the face of it pointed to a 7% quarter-on-quarter contraction in the economy, though IHS Markit cautioned that this was probably to be an understatement as its survey doesn’t cowl retailers or most self-employed individuals.
A 1 ballot of economists on Thursday pointed to a roughly 13% contraction in financial output in the present quarter, which might be the most important since data started after the World Battle Two.
Knowledge firm IHS Markit mentioned 81% of British providers corporations and 75% of producers reported a fall in enterprise exercise.
Just some medical and foods and drinks producers reported development in April, and a handful of providers corporations linked to on-line retail and the general public sector.
Employment in British corporations fell on the quickest tempo since PMI data began in the 1990s, though in some instances this mirrored use of the federal government’s furlough scheme, information firm IHS Markit mentioned.
Authorities finances forecasters final week mentioned unemployment might rise as excessive as 10% with an additional 2 million individuals dropping their jobs if a three-month lockdown was solely slowly lifted over the following three months.
Firms slashed costs at a document tempo to prop up demand, the survey confirmed.
The PMI for the providers sector, which accounts for about 80% of Britain’s non-public sector economy, fell to 12.Three from 34.5, one other document low.
A slight enchancment in optimism was the one shiny spot for providers corporations.
Producers fared little higher as output and new orders crashed.
As in earlier months, a lengthening of provider supply occasions – in regular occasions is an indication of wholesome demand – enormously flattered the headline PMI for producers, though it nonetheless fell to a document low of 32.9, from 47.eight beforehand.
Modifying by Hugh Lawson and Alistair Smout