Eurozone factories in lockdown suffered a record-breaking collapse in April, but an end to the strictest restrictions across the region pointed to a gradual recovery in the coming months.
The tumbles in production, new orders and exports were unprecedented last month, with record lows in France, Italy and Greece, according to IHS Markit’s purchasing managers’ index (PMI).
The eurozone manufacturing PMI fell sharply from 44.5 in March to 33.4, surpassing the lows hit during the depths of the financial crisis. Any score below 50 indicates a contraction.
The eurozone countries hit hardest by coronavirus have started to ease their lockdowns with workers returning to factories in Spain and Italy. However, economists said social distancing and weak demand would keep up the pressure on the industry.
Chris Williamson, economist at IHS Markit, said the “rate of decline will now likely start to moderate” but warned the recovery will be “frustratingly slow”.
“Steps needed to keep workers safe will mean even businesses that are able to restart production will generally be running at low capacity, and most will be operating in an environment of greatly reduced demand,” he said.
The figures came as Sentix’s confidence survey for the eurozone pointed to a “breathtaking crash” in the region’s economy.
The current situation index slid further from minus 66 to a record low of minus 73. However, overall confidence was lifted marginally by expectations of a rebound as countries start to relax restrictions slowing the spread of Covid-19.
The PMI survey found that eurozone manufacturers were “extremely downbeat” about the future – with Spanish, German and Austrian factories the gloomiest. The backlog of work for factories fell for the 20th consecutive month and suffered the sharpest drop in 11 years.
Claus Vistesen, eurozone economist at Pantheon Macro, said the figures were “every bit as terrible as feared”. The dire headline number was “misleadingly strong” as supply pressures boosted the overall index and masked a complete collapse in the output indicator, he warned.
Mr Vistesen said the PMI will make a “sharp rebound” next month but added a predicted pick-up “by no means signals that the sector is out of the woods”.