Following disastrous PMI prints across Europe (and China last month), preliminary March US Manufacturing and Services data was expected to plunge notably into contraction (having already tumbled in February).. and they both did...
US Manufacturing PMI dropped to 49.2 (contraction) - a 127-month low - from 50.7 (dramatically better than the expected drop to 43.5 - thanks to the farcical 'bullishness' of longer supplier delivery times).
US Services PMI crashed to 39.1 from 49.4 - a record low.
Steep rates of manufacturing contraction were signalled for production and new orders, both of which fell to the greatest extent since 2009, with many firms linking this to the escalation of preventative measures following the outbreak of COVID-19. Some companies have reported having to shutdown and give refunds where orders could not be fulfilled in time.
Driving the downturn in services output was a steep fall in new business. The decrease in sales was the quickest since data collection began in late-2009, as both domestic and foreign client demand weakened. Companies highlighted challenging conditions across the services sector, especially in travel and tourism and other consumer-facing industries.
It's Global...with the US Composite Index crashing to 40.5 - a record low...
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:
“US companies reported the steepest downturn since 2009 in March as measures to limit the COVID-19 outbreak hit businesses across the country. The service sector has been especially badly affected, with consumer-facing industries such as restaurants, bars and hotels bearing the brunt of the social distancing measures, while travel and tourism has been decimated. However, manufacturing is also reporting a slump in demand, with production falling at a rate not seen since 2009, linked to either weak client demand, lost exports or supply shortages.
“Jobs are already being slashed at a pace not witnessed since the global financial crisis in 2009 as firms either close or reduce capacity amid widespread cost-cutting.
“The survey underscores how the US is likely already in a recession that will inevitably deepen further. The March PMI is roughly indicative of GDP falling at an annualised rate approaching 5%, but the increasing number of virus-fighting lockdowns and closures mean the second quarter will likely see a far steeper rate of decline.”
Get that bill signed!