Flash Purchasing Managers Indices for the UK and leading Eurozone economies will be released on Tuesday morning, giving markets a first look at the impact of the coronavirus outbreak on business confidence.
Given the evolving nature of the crisis, none of the figures will reflect the full economic impact of the outbreak and containment measures, although they are likely to clearly show a severe recession developing in all the surveyed economies. The headline survey figures will be least interesting simply out of “shock and awe” due to the potential for reaching multi-decade lows on many of the series. However, anecdotal reports of supply and demand conditions, as well as hiring and firing intentions may end up being more relevant for markets.
The key releases are likely to be:
- UK March Flash PMIs: 09:30 GMT Tuesday 24/03. The median forecast currently submitted to Bloomberg for the UK composite PMI is a fall to 45 from 53.0 in February. Anecdotal reports of hiring and firing decisions will be especially relevant for the UK, where the Government has already implemented job guarantees and support measures for business lending. These anecdotal reports will also be a first look at the effectiveness of these measures. In the Eurozone, the German manufacturing PMI will be particularly interesting for the same reason.
- Germany March Flash PMIs: 08:30 GMT Tuesday 24/03. The median forecast submitted to Bloomberg for the Manufacturing and Composite PMIs are 39.9 and 41.0 respectively. As with the UK releases, Germany has already announced substantial easing and support measures, so the anecdotes accompanying the release may give a sense of the initial response. Last week’s preliminary IFO survey gave a grim portent for the PMI results: the Business Climate Index dropped from 96 in February to 87.7 in March, the biggest drop since 1991 and the lowest figure since 2009.
Author: Ranko Berich, Head of Market Analysis