New factory orders in Germany dropped by 15.6% in March 2020 compared to the previous month. The market consensus assumed a 10% drop. This was the sharpest collapse since at least 1991. This reflects the serious damage caused by the COVID-19 crisis. Foreign orders fell by 16.1% due to lower demand from both the Eurozone (-17.9%) and other countries (-15%).
The services PMI in Italy, according to final data, fell in April 2020 to 10.8 from 17.4 points in the previous month. The reading indicated a new record decline in the services sector. Both business and new business fell at the fastest pace in over 22 years of data collection. The number of employees continued to fall, and the rate of job losses accelerated to the highest level ever.
The PMI for the construction sector in the UK fell to 8.2 in April 2020 from 39.3 points in the previous month and well below market expectations at 22.2. This was the fastest rate of decline in activity in the sector since data collection began in April 1997.
The PMI for services in Spain fell to 7.1 in April 2020 from 23 points in the previous month and was worse than market expectations of 10 points. The reading indicated a new record fall in the services sector, as government restrictions in the economy had a major impact on activity and demand. All sub-sectors where data are collected recorded a significant decline in business activity compared to March.
The macroeconomic data show quite clearly that the second quarter may likely to be worse than the first. On the other hand, stock exchange indices are still at high levels, as if they did not take the fatal second quarter into account at all. The first wave of declines on the stock exchanges may have been a discount on the weak first quarter, while in the second quarter the situation was to improve. However, there is little indication of this. It seems, therefore, that the markets have been supported by the huge amount of cheap money from the central banks and have become detached from economic reality.
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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