The decline in business activity across Germany deepened in April, with both services and manufacturing seeing record decreases in output as a result of the coronavirus pandemic and subsequent lockdown, latest ‘flash’ PMI survey data from IHS Markit showed.
The headline Flash Germany Composite PMI Output Index registered 17.1 in April, down sharply from 35.0 in March and by far its lowest reading since comparable data were first compiled more than 22 years ago.
The preliminary data were based on responses collected between April 7-22.
The survey response rate was not affected by shutdowns caused by the COVID-19 outbreak.
The biggest impact of the pandemic and associated containment measures continued to be seen across the service sector, where business activity fell at the fastest rate in more than two decades of data collection as around three-quarters of firms reported a fall.
Data also showed an unprecedented drop in manufacturing output, with the rate of decline closer to that of services activity than was the case in the previous month.
Businesses reported a collapse in demand from clients both at home and abroad in April.
The rate of decline in overall inflows of new work far exceeded the previous record seen in March, with new business received from abroad falling at a similarly sharp pace.
In both cases, the decline was led by the service sector.
Employment unsurprisingly fell for the second month in a row in April.
Moreover, unprecedented job losses across the service sector saw the overall rate of decline surpass the previous record set in April 2009.
The decline in manufacturing workforce numbers also gathered pace, reaching the fastest in almost 11 years.
Anecdotal evidence highlighted the cancellation and non-renewal of contracts, redundancies and natural staff wastage.
At the same, however, there were widespread reports of the use of short-time work helping firms avoid staff cuts.
Elsewhere, April’s survey showed sustained downward pressure on prices charged for goods and services, with the rate of decline accelerating to the quickest in more than a decade.
There was also a further softening of cost pressures, linked to lower prices for oil and other commodities, as well as a reduction in average wage costs.
Operating expenses across the service sector fell – albeit marginally – for the first time since September 2009.
Firms’ expectations towards activity over the next 12 months remained deep in negative territory in April, recovering only marginally from March’s series record low (since July 2012).
This was the case across both monitored sectors, with manufacturers remaining comparatively more bearish about the outlook.
The Flash Germany Manufacturing PMI fell sharply from 45.4 in March to a 133-month low of 34.4, reflecting steep and accelerated contractions in output, new orders and employment.
However, its decline was softened by a record increase in supplier delivery times and a rise in stock of purchases. ■