Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Transportation among the worst-performing sectors as modes of
travel and distribution largely halted during COVID-19 crisis
Travel restrictions hampering tourism have also impacted
overall transport activity
Record job losses at transport firms as new business dwindles,
according to IHS Markit Global Markit Sector PMI data
As economies tentatively begin to reopen following the crippling
impact of the coronavirus disease 2019 (COVID-19) outbreak during
2020 so far, a divergence in sectoral fortunes is becoming more
apparent. Although some segments of industry were able to operate
during lockdowns, returns to work during May were more widespread
as firms adapted to COVID-19 compliant health and safety practices.
That said, large swathes of the service sector remained shut, or
only partially operational, as emergency public health measures
continued to prohibit or restrict many of their previous business
practices.
Notable sectors that have struggled include transportation.
Although included in this are courier and postal services, which
have been important to many consumers during lockdowns, household
deliveries are a typically low-margin area of any courier business.
Airline services, cargo, freight and storage have all meanwhile
been stymied by travel restrictions and supply chain delays.
Ranking second from bottom in the May output league table,
according to the latest IHS Markit Global Sector PMI data, the
latest contraction in transportation activity was exceeded only by
that seen for tourism & recreation.
Demand unlikely to regain strength until travel
restrictions are lifted
The transportation sector plays a pivotal role in logistics and
supply chain movements across the world, with the impact of
COVID-19 travel restrictions on the day-to-day operations of
storage and cargo firms heavily denting supplier performance in the
manufacturing sector, placing downward pressure on supplier
margins. Although supplier prices for some items were reported to
have risen due to shortages, 12 of the 15 PMI surveys for which
composite data are available registered lower cost burdens in May.
Nonetheless, at the global and European level, companies stated
that the rate of decline in output prices outpaced that of input
prices as firms sought to attract new clients and retain existing
customers.
Essential travel only and weak demand leads to job
cuts
Meanwhile, confusion surrounding quarantine periods and
discussions regarding reciprocal travel arrangements for those from
countries with low infection rates has led to calls from travel
firms for greater clarity. Without clearer guidelines on who can
travel where, companies fear greater drains on demand, especially
for air travel. The mass grounding of fleets has led to vast job
losses at airline service providers across the world, with British
Airways alone expecting to make 12,000 redundancies as the pandemic
continues. Cuts to transportation employment were recorded across
all monitored regions for which comparable sector PMI data are
available in May. European companies registered the sharpest
contraction in workforce numbers as travel across the region
remained minimal and hopes for peak season tourism were muted.
Despite the rate of job cuts easing in May, it was still the
second-fastest since data were available more than 22 years ago,
with expectations of a challenging tourism season across Europe
likely to lead to cases of prolonged unemployment. The drop in
demand may also lead to a greater deterioration in labour market
conditions than was seen during the global financial crisis,
especially if uncertainty surrounding the virus and a vaccine
remains.
That said, hopes of more widespread easing of lockdowns boosted
transportation firms' expectations towards output over the coming
year. Although companies were (on balance) not confident of an
increase in activity, they no longer foresee further sharp drops in
demand. This contrasts markedly with companies in the tourism &
recreation sector who continue to foresee a decline in activity
over the next year.
Forthcoming economic data releases:
June 23rd: IHS Markit Eurozone and US Composite, Manufacturing
and Services Flash PMI (June data)
July 1st: IHS Markit Eurozone Manufacturing PMI (June
data)
July 6th: IHS Markit Global and US Sector PMI (June data)
July 8th: IHS Markit Europe and Asia Sector PMI (June
data)
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.
