France: Private sector activity contracts at the sharpest pace in over two decades in March
The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) plummeted to 30.2 in March from 52.0 in February, its lowest result in 22 years of data collection. Thus, the index fell below the 50-threshold that separates contraction from expansion in business conditions.
March’s downturn reflected a widespread shutdown in business activity due to the Covid-19 pandemic. The service sector took the worst beating, reporting the sharpest fall in activity since the series began in May 1998, while activity in the manufacturing sector declined at the quickest pace in over a decade. Overall new orders contracted at the fastest pace in the series’ history, with service providers again registering a steeper decline than manufacturers. In turn, firms in both sectors cut staff levels dramatically. Finally, the one-year business outlook was the most pessimistic since data collection began in July 2012.
In view of March’s developments, Eliot Kerr, Economist at IHS Markit, noted:
“Currently with the fourth highest number of confirmed infections in Europe, France has put in place wide-ranging measures to stem the further spread of COVID-19 but is also balancing these with policies to limit the associated economic impact. Over the coming months, the PMI will be a crucial indicator in assessing the development of the effects of these policies on the economy.”