Pandemic Slams Global Factories, Activity Sinks to New Lows

Factory activity was ravaged across the world in April, business surveys showed, and the outlook looked bleak as government lockdowns to contain the new coronavirus pandemic froze global production and slashed demand.

The coronavirus has infected more than 3.5 million people globally and killed around 247,000. With the public told to stay home in numerous countries, the global economy is expected to suffer its steepest contraction on record this year as supply chains have been massively disrupted.

In a bid to combat the impact of the lockdowns, central banks and governments have unleashed unprecedented levels of fiscal and monetary policy, suggesting that without this conditions could have been even worse.

Still, a series of Purchasing Managers’ Indexes (PMIs) from IHS Markit across Europe and Asia fell deeper into contraction last month, with many diving to all-time lows and others hitting levels last not seen since the 2008-2009 global financial crisis.

A gauge from the United States published on Friday showed manufacturing activity plunged to an 11-year low in April as the coronavirus wreaked havoc, suggesting the world’s largest economy was sinking deeper into recession.

On Monday, IHS Markit’s final manufacturing PMI for the euro zone sank to 33.4, its lowest since the survey began in mid-1997 and far beneath the 50-point line dividing growth from contraction.

With shops closed and consumers concerned about their health and employment prospects, demand sank in the bloc to by far the lowest in the survey’s history, giving scant hope for an imminent turnaround.

It was a similar story from Britain on Friday when its PMI showed manufacturers there suffered their biggest fall in output and orders for at least three decades.

“This past week saw the amazing coincidence of the publication of the deepest quarterly economic decline in the Western world in almost 100 years and the conclusion to the strongest monthly equity rally in more than 30 years,” said Erik Nielsen, chief economist at UniCredit.

But European stock markets and oil prices fell on Monday as a spat between top U.S. officials and China over the origin of the coronavirus fuelled fears of a renewed trade war that might derail or delay a swift rebound.