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Global PMI hits lowest since 2009 as some eight out of 23
sectors see record falls in output
Global investment spending in steep downturn, but demand for
consumer services also slides
Autos lead downturn with record decline in output
Pharmaceuticals and biotech outperform
Worldwide growth plunged by a record extent in February, the
pace of expansion slowing to the weakest since May 2009, according
to the latest PMI surveys. The JPMorgan Global PMI™ (compiled by
IHS Markit) fell from 52.2 in January to 46.1.
Worldwide factory production dropped at the steepest rate since
April 2009 as companies reported falling demand and a reduced
supply of inputs: February saw the second-longest lengthening of
suppliers' delivery times since global production growth boomed in
2004, linked in the majority of cases to extended factory closures
in China. However, it was not just supply chain disruptions to
blame: service sector activity plunged to a degree not seen since
May 2009 amid signs of demand slumping for many travel and
consumer-related activities.
Broad manufacturing downturn led by sliding demand for
investment goods
The global survey data also revealed a broad-based drop in
factory output by main product groups. Worldwide output fell at the
sharpest rates seen since comparable data were first available in
late-2009 for consumer goods, intermediate goods (inputs supplied
to other companies) and investment goods.
The drop in investment goods output is especially noteworthy,
reflecting in turn a marked drop in new orders from businesses
worldwide for plant, machinery and other capital equipment. As
such, the deterioration in orders for new investment goods points
to a renewed downturn in global capex arising from the heightened
uncertainty surrounding the spread of COVID-19. The recent slump
indicates a disappointing set-back after signs of capex spending
recovering at the start of the year amid an easing of US-China
trade war tensions.
Consumer services hit by virus fears
In addition to supply-side disruptions to business activity from
supply shortages, the PMI surveys also indicated weakened demand
for many consumer services. This was often blamed on travel and
tourism in particular being affected by the coronavirus outbreak.
Consumer services saw the highest incidence of companies reporting
some negative impact from the COVD-19 outbreak with the exception
of basic materials manufacturing, where the supply disruptions were
among the greatest recorded during the month.
Measured overall, global consumer services activity fell at a
survey record pace in February (data were first collected in
late-2009). However, other services sectors also saw sharply
reduced activity, with financial services and business services
output likewise falling at the steepest rates since 2009.
Autos lead downturn with record decline in
output
IHS Markit's more detailed PMI data neatly encapsulated the
impact of the COVID-19 outbreak in February. Only seven of the 23
sectors reported growth globally, led by pharmaceuticals and
biotech, reflecting efforts to deal with the epidemic.
Some eight of the 23 sectors saw record falls in output. The
steepest decline was reported in the auto industry, which saw by
far the steepest drop in production on record (since late-2009).
Existing malaise due to weak car demand was exacerbated by the
impact of factory closures and supply chain disruptions from
China.
Other sectors seeing record declines in activity included food
production, transportation, commercial & professional services,
chemicals, metals & mining, machinery & equipment, and
household products.
Chris Williamson, Chief Business Economist, IHS
Markit
Tel: +44 207 260 2329
chris.williamson@ihsmarkit.com
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
