French business activity crashes to new record low in April: PMIs

(C) Reuters. FILE PHOTO: An employee works on the automobile assembly line of Bluecar electric city cars at Renault car maker factory in Dieppe, western France

PARIS (Reuters) – French business activity has plunged even more than expected this month to hit a new record low as a nationwide lockdown shuttered shops and factories across the euro zone’s second-biggest economy, a survey showed on Thursday.

Data compiler IHS Markit said its preliminary purchasing managers’ index (PMI) for April dropped to 11.2 from 28.9 in March, hitting the lowest reading on records going back to 1998.

The result, miles below the 50-point threshold denoting growth in activity, not only fell far short of the 26.0 points expected on average in a Reuters poll, but was well down from even the lowest forecast of 18.5.

Activity has ground to a halt at many firms since a nationwide lockdown was imposed in mid-March to contain the coronavirus outbreak, plunging the economy into what the government expects to be France’s worst post-war recession.

Companies have since put more than 10 million people on state-subsidised furloughs or one out of two private sector workers, the Labour Ministry said on Wednesday.

With most hotels, restaurants and non-food shops closed, the service sector is bearing the brunt of the shutdown, with the PMI for the sector collapsing to 10.4 from 27.4 in March, well below the 25.0 economists had expected.

The manufacturing sector fared better, but its index fell nonetheless to a record low of 31.5 from 43.2 in March, worse than the 37.5 expected by economists.

The survey offered little hope of respite, with new orders and staff headcount both falling at historic rates in both services and manufacturing.

France’s lockdown is for now slated to run until May 11, but the government has warned that not all businesses are going to be able to re-open immediately.