U.S. services sector activity falls to new record lows: IHS Markit

(C) Reuters.

WASHINGTON (Reuters) – U.S. business activity plumbed new record lows in April as the novel coronavirus severely disrupted production at industries, a survey confirmed on Tuesday.

Data firm IHS Markit said last weekarb its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, tumbled to a reading of 27.0 last month. That was the lowest since the series began in late 2009 and followed a flash reading of 27.4 and March’s final reading of 40.9. A reading below 50 indicates a contraction in private sector output.

Businesses have been pressured by nationwide lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus, leading to a contraction in the economy.

The government reported last week that gross domestic product declined at a 4.8% annualized rate in the first quarter, the steepest pace of contraction in output since the fourth quarter of 2008.

The IHS Markit survey’s services sector final Purchasing Managers Index dropped to an all-time low reading of 26.7 in April from a flash reading of 27.0 last month and final 39.8 in March. The data firm confirmed last week that manufacturing activity sank in April to its lowest level since March 2009.

It said new business at private sector firms slumped, as demand fell at the sharpest rate on record. That left greater spare capacity at firms, leading them to reduce their workforce numbers at the steepest rate in the series history.