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Record slump for eurozone firms amid COVID-19 lockdown
Business activity in the eurozone has suffered its fastest and deepest slump since records began more than two decades ago, according to a survey of business leaders.
Firms are buckling under the unprecedented upheaval of government lockdowns to contain the coronavirus, with offices and shops closing down across Europe.
IHS Markit’s composite purchasing managers’ index (PMI) headline figure plummeted from 51.6 in February to a record low 29.7 in March, the worst slump since the survey began in 1998. The final figures are worse than early flash estimates had indicated.
Services slumped further to 26.4, down from 52.6. Figures above 50 show growth in output, with numbers below 50 showing decline.
The four largest nations covered by the survey all saw record declines in activity, with Italy and Spain experiencing the fastest declines. Levels of new work across the eurozone were also at a record low.
Net job losses were reported for the first time in five years and at the fastest rate since 2009, hitting every country surveyed after a period of broadly rising employment.
European stocks declined on Friday on the bleak figures. The pan-European STOXX 600 index (^STOXX) fell by around 0.6%.
In the UK, where a reading of 34.5 signalled the steepest downturn for the services sector since the survey began in 1996, London’s FTSE 100 (^FTSE) was down by 1%.
“That’s not a contraction — that’s an economic collapse, and utterly tragic,” said Michael Hewson, the chief markets analyst at CMC Markets.
The declines in Europe followed a weak trading session in Asia.
China’s SSE Composite Index (^SSEC) fell by 0.6% on Friday, while the Hang Seng (^HSI) was down by almost 0.2% in Hong Kong at market close. Japan’s Nikkei (^N225) rose by just 0.01%, while the KOSPI Composite Index (^KOSPI) in South Korea closed 0.03% in the green.
Ryanair (RYA.L) expects to report €1bn in profits over the past year, despite a 48% collapse in passenger numbers in March over the coronavirus.
The budget airline group, which includes Austrian airline Lauda, said widespread flight bans and travel restrictions mean its flight numbers are now just 1% of normal levels.
But the company announced on Friday it still expected its profits to fall within previous guidance for its 2020 financial year, which ran to 31 March. It now expects pre-tax profits of between €950m ($1.03bn, £832m) and €1bn ($1.08bn, £875m), at the lower end of expected levels.
Bosses at Primark have asked for a temporary 50% pay cut, as the UK’s retailers battle to survive the unprecedented coronavirus lockdown.
With retailers enduring their worst month on record in March and non-essential shops now forced to remain shut, Primark closed its 189 UK shops in late March. A further 187 shops elsewhere in Europe and in the US had already been closed.
Primark’s parent company told investors on Friday its full-year earnings would be “much lower than expected.”
“The board is acutely aware that many Primark employees will see their livelihoods affected by COVID-19,” said owner Associated British Foods (ABF.L).
What to expect in the US
Futures were also pointing to a lower open for US stocks on Friday.
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