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Spain PMI March 2020

Spain: Composite PMI collapses on coronavirus fallout

Largely reflecting a severe contraction of the services sector prompted by the Covid-19 fallout, the IHS Markit composite Purchasing Managers’ Index (PMI) nosedived from 51.8 in February to 26.7 in March. Thus, the index plunged below the 50-threshold, indicating a steep retreat in business activity.

The IHS Markit Services PMI plummeted from 52.1 in February to 23.0 in March, signaling an unprecedented drop in services-sector activity. Output and new orders plunged, suffering their worst declines in over two decades of survey history, as demand for services came to a standstill and as firms had to shut down in the face of the coronavirus pandemic and the government’s drastic measures to contain it. Against such dire backdrop, business confidence fell to its lowest on record, while service providers shed jobs at the second-fastest pace in survey history. Regarding prices, operating expenses were up only marginally, and in the face of muted demand, firms cut output charges drastically.

The IHS Markit Manufacturing PMI also fell, although to a much lesser extent, coming in at 45.7 in March (February: 50.4)—a near seven-year low; thus, signaling a marked deterioration in operating conditions. The downturn was reflective of Covid-19 taking its toll and its associated lockdown to curb its spread. Output fell at the sharpest pace since June 2012, while new work suffered the worst decline in nearly eight years in March. There was also a record deterioration of supplier delivery times as the coronavirus disrupted global supply chains. On the price front, input costs declined amid lower energy and raw material prices, which, in the face of bleak demand, prompted goods producers to lower selling prices. Lastly, manufacturers’ confidence about the future plunged to a record low on fears over the pandemic’s impact on activity.

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