Today (on Thursday, April 23) the preliminary PMI readings were published in selected countries for the manufacturing and services sectors. Already in March, these indicators showed a recession in almost every industry, and the April publication further worsened this picture. However, there is a chance that April may set a hole in these macroeconomic publications which are fatal for economies.
PMI data showed that private sector activity in Germany, France, Japan, and Australia fell at a record pace in April. It was even a more rapid decline than the one that assumed market consensus. Particular attention should be paid to the very low PMI publication for the French services sector. A preliminary estimate showed that it fell to 10.4 points in April 2020, which is well below market expectations at 25 points. It is also the lowest reading ever. The outbreak of coronavirus continued to suppress demand and supply in the first month of the second quarter, and new orders and new export orders were shrinking fastest in the history of the PMI publications, and business sentiment reached new record lows.
In Japan, meanwhile, the PMI for manufacturing fell to 37.8 points in April. It was the third consecutive month of the sector shrinking and the most rapid decline in the indicator since April 2009. Due to the deepening crisis, production fell the most for nine years, the level of new orders also decreased, and the collected data indicate a sharp decline in foreign sales.
In Germany, in turn, an initial estimate showed that the PMI for services fell to 15.9 from 31.7 in the previous month, well below market expectations of 28.5. It was the largest monthly decline in the services sector since the publication began in 1998. Also for the entire euro area, the data was worse than expected. The indicator for services fell to 11.7 points, and for manufacturing to 33.6 points.
Fatal macroeconomic data may translate into today's stock indexes, which have already seemed to be declining. The German Dax retreats by almost 0.9 percent.
From the point of view of the macroeconomic calendar, it is worth remembering today's European Union Summit and talks to help develop a joint plan to recover from the economic collapse.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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