The closely watched IHS Markit/CIPS Flash UK composite purchasing managers’ index (PMI) plunged to a reading of 12.9 for April, from a reading of 36 last month. The monthly decline in manufacturing and services activity exceeded the downturn seen at the height of the global financial crisis “by a wide margin”, the survey said.
Chris Williamson, chief business economist at IHS Markit, said: “Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis, confirming fears that GDP will slump to a degree previously thought unimaginable in the second quarter due to measures taken to contain the spread of the virus.
“Simple historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with GDP falling at a quarterly rate of approximately 7 percent.
“The actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector, which have been especially hard-hit by the Covid-19 containment measures.”
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FTSE 100 LIVE: Asia stocks pull ahead on US stimulus
12.10pm update: Bank of England offers terrifying outlook
Bank of England interest-rate setter Jan Vlieghe said: “We are experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries.
“The risks are that it will take longer and that it will look a little bit more like a U than a V.”
He said the recovery was unlikely to be swift.
11.47am update: FTSE update
The FTSE 100 index at 11.45am was down 10.19 at 5760.44.
11.25am update: EU markets jump
The pan-European STOXX 600 was up 0.3 percent, recovering for a second straight day as oil prices edged higher after collapsing at the start of the week.
The energy index jumped 2.4 percent, with Total SA , BP Plc and Royal Dutch Shell Plc providing the biggest boost to the STOXX 600.
Olivier Konzeoue, FX sales trader at Saxo Markets, said: “The rather muted reaction relative to the amplitude of the misses proves the lack of surprise for markets, which are almost immune to data at the moment.
“The focus is instead going to be on the various exit strategies as well as the stimulus initiatives put in place by governments and central banks to counter the negative effect of the coronavirus.”
10.45am update: Markets unfazed by PMI stats
Chris Beauchamp, Chief Market Analyst at IG, said: “A dire set of European PMIs has not led to a severe decline in stock markets, with the FTSE 100 only down 5 points in mid-morning trading.
“If you had told an investor on 1 January that, within a few months, global PMIs would dive to a fraction of their previous level, they would have thought you mad. What is equally confusing perhaps is the way markets seem to have taken today’s incredible readings in their stride, or at least in a relatively calm fashion.”
Oil prices have slumped to record oils
9.42am update: Economic blow for eurozone
IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI) for the bloc, seen as a good gauge of economic health, sank to 13.5, by far its lowest reading since the survey began in mid-1998.
9.25am update: Pound holds firm
Versus the euro, the pound was up around 0.1 percent at 87.65 pence
8.39am update: Germany’s private sector recession deepens
A survey found services and manufacturing suffered record falls in output due to the coronavirus outbreak and measures to contain it.
IHS Markit’s flash composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, plunged to 17.1 from 35.0 the previous month.
It was the lowest reading on record and compared with a Reuters poll of analysts who had predicted a much smaller drop to 31.0.
IHS Markit economist Phil Smith said the April survey revealed the full effects of the pandemic and subsequent lockdown on Germany’s economy, with business activity across manufacturing and services falling at unprecedented rates.
Mr Smith: “Compared to a low of 36.3 during the financial crisis, the headline PMI’s reading of 17.1 paints a shocking picture of the pandemic’s impact on businesses.”
Global economies have been crippled by the coronavirus
8.16am update: EU markets inch higher
European stock markets inched higher o following a bunch of better-than-expected quarterly earnings reports.
The pan-European STOXX 600 index was up 0.3 percent at 8.05am, recovering for a second straight day after a historic collapse in oil prices sparked a selloff at the start of the week.
Kicking off the first-quarter earnings season for the big European lenders, Credit Suisse Group AG posted a 75 percent jump in profit, but cautioned the pandemic could impact performance in coming quarters. Its shares rose 2.5 percent.
The STOXX 600 has bounced this month after hitting eight-year lows in March as unprecedented global stimulus and signs of easing in the coronavirus outbreak brought back bargain hunters.
8.01am update: FTSE 100 opens
London’s blue chip opened at 5,770.63.
7.39am update: FTSE 100 on for mild start
London’s blue chip is set to open at 5,771 from 5,768, according to IG Markets.
7.33am update: EU futures update
E-mini futures for the S&P 500 climbed 0.25 percent after staying mostly flat during Asian hours while London’s FTSE futures were mostly unchanged.
European stock futures nudged up with the Eurostoxx 50 up 0.3 percent and Germany’s DAX futures rising 0.4 percent.
7.27am update: US economy hemorrhaging jobs
A record 26 million Americans likely sought unemployment benefits over the last five weeks, meaning that all the jobs created during the longest employment boom in US history were wiped out in about a month as the novel coronavirus savages the economy
Scott Anderson, chief economist at Bank of the West in San Francisco, said:”The US economy is hemorrhaging jobs at a pace and scale never before recorded.
“It compares to a natural disaster on a national scale.”
Global markets have hit all time lows amid the coronavirus pandemic
7.22am update: German consumer moral at all time low
German consumer moral reached a record low heading into May as the coronavirus pandemic and measures to contain the outbreak slammed the mood among shoppers.
The GfK consumer sentiment indicator, based on a survey of 2,000 Germans, entered negative territory, dropping to -23.4 points from a revised 2.3 in the previous month.
The reading undershot a Reuters poll of analysts who had forecast a much less significant drop to -1.8.
Rolf Buerkl, a researcher for Nuremberg-based GfK, said: “The consumer climate is currently in free fall.”
7.14am update: EU to agree on recovery package
EU leaders will move on Thursday towards joint financing of a recovery after the coronavirus pandemic by asking the European Commission to propose a fund sufficiently big to target the most affected sectors and regions.
Many leaders see the massive joint recovery financing as a crucial tool of EU solidarity as some in the 27-nation bloc will have a harder time than others regaining their economic footing after the deepest-ever EU recession this year.
A senior official said: “The idea of having a special instrument to deal with the crisis is starting to be consensual.”
Global economies have been crippled by the coronavirus
7.10am update: UK public borrowing up
Public sector borrowing – excluding banks owned by the state – surged to its highest March level since 2016 last month.
It jumped £9.3 billion to a higher-than-forecast £48.7 billion in the financial year to March 31, before the full impact of the Government’s mammoth coronavirus support measures, according to official figures.
The Office for National Statistics (ONS) said borrowing surged to £3.1 billion – £3.9 billion higher than a year earlier.
The March hike saw borrowing for the full year come in higher than the £47.4 billion forecast by the independent fiscal watchdog, the Office for Budget Responsibility.
But the ONS cautioned the figures do not yet take into account the expected “significant” impact of Covid-19 Government action launched late last month, and said the March figure will likely be revised higher in the coming months.
7.06am update: French economic activity down by 35%
A country-wide lockdown in France is still reducing economic activity by 35 percent more than a month since it was imposed, despite a slight pick-up in the industrial and construction sectors, according to INSEE official statistics.
6.12am update: Asian markets rise
Asian stock markets rose on Thursday due to a combination of a rebound in crude prices from historic lows and the promise of more US government aid to help the coronavirus-ravaged economy helped calm nervous markets.
US corporate earnings also lifted equities, analysts said, though overall sentiment remained fragile as the pandemic cut a destructive path through the world economy. MSCI’s broadest index of Asia Pacific shares outside of Japan bounced from two-week lows to be up 0.5 percent at 460.43 points. Australian S&P/ASX added 0.4 percent, Chinese shares opened firm with the blue-chip index up 0.3percent. Japan’s Nikkei climbed 0.8 percent.
The gains followed a strong overnight lead from Wall Street with the Dow up 2 percent, S&P 500 adding 2.3 percent and Nasdaq rising 2.8 percent.
All 11 S&P 500 sector indexes climbed as the US Senate unanimously approved the new relief package, adding to trillions of dollars in stimulus that has helped Wall Street rebound from its March lows.
The House of Representatives is expected on Thursday to clear the relief, which would be the fourth coronavirus measure passed by Congress, and would boost the overall federal financial response to almost $3 trillion.
Stock markets may have bottomed out after the impressive bounce since a rout last month, analysts said.
5.40am update: Record US jobless claims wipe out post-Great Recession employment gains
A record 26 million Americans likely sought unemployment benefits over the last five weeks, confirming that all the jobs created during the longest employment boom in US history were wiped out in about a month as the novel coronavirus savages the economy.
Thursday’s weekly jobless claims report from the Labor Department will add to a growing pile of increasingly bleak economic data. It will come amid rising protests against nationwide lockdowns to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus.
President Donald Trump, who is seeking a second term in the White House in November’s general election, has been anxious to restart the paralyzed economy. Trump on Wednesday applauded steps taken by a handful of Republican-led states to begin reopening their economies, despite warnings from health experts of a potential new surge in infections.
“The US economy is hemorrhaging jobs at a pace and scale never before recorded,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It compares to a natural disaster on a national scale.”