Eurozone manufacturing activity contracted at the fastest pace in more than seven years in March as the outbreak of coronavirus, or covid-19 weighed on orders, output, employment and confidence, final data from IHS Markit showed on Wednesday.
The final factory Purchasing Managers' Index fell to 44.5 from 49.2 in February. The reading was also below the flash estimate of 44.8.
The score has remained below 50.0 for fourteen consecutive months and reached its lowest level in 92 months.
The survey showed that covid-19 related shutdowns pulled down output and orders in March. The deterioration in manufacturing output was the greatest since April 2009. Similarly, new orders deteriorated to a degree unsurpassed for just under 11 years.
Manufacturers continued to face significant obstacles in securing supplies. The average lead times deteriorated to the greatest degree in nearly 23 years of data collection.
Firms reduced their holdings of both input and finished goods in order to increase working capital. Further, manufacturers cut their employment levels at the sharpest pace in over a decade.
There was a marked decrease in input costs due to fall in raw material prices. Output charges also fell to the greatest degree recorded by the survey for four years.
Reflecting concerns over the short- and long- term impacts of the covid-19 pandemic, business sentiment logged its biggest monthly fall on record.
"The concern is that we are still some way off peak decline for manufacturing," Chris Williamson, chief business economist at IHS Markit said.
Besides the hit to output from many factories simply closing their doors, the coming weeks will likely see both business and consumer spending on goods decline markedly as measures to contain the coronavirus result in dramatically reduced orders at those factories still operating, Williamson added.
At country level, Italy posted the sharpest deterioration in operating conditions, with the respective PMI hitting the lowest in nearly 11 years. The PMI plunged to 40.3 in March from 48.7 in February.
France's final factory PMI declined to 43.2 from 49.8 in February. The flash reading was 42.9. The final score signaled the sharpest fall since January 2013.
The progression of the covid-19 outbreak into a pandemic saw the downturn in Germany's manufacturing sector deepen in March. The manufacturing PMI came in at 45.4, down from a 13-month high of 48.0 a month ago and below the flash 45.7.
Spain's operating conditions deteriorated to its lowest level in nearly seven years in March. The PMI dropped to 45.7 from 50.4 in February.