Italy service sector shrinks at steepest rate on record in April: PMI

(C) Reuters.

ROME (Reuters) – Italy’s service sector shrank at the fastest rate in more than 22 years in April, a survey showed on Wednesday, as a lockdown imposed to try to contain the coronavirus pandemic shuttered most businesses.

The IHS Markit Business Activity Index for services dropped to 10.8 from 17.4 in March, plunging even further below the 50-mark that separates growth from contraction and posting easily the lowest reading since the survey began in January 1998.

The index level was above the median forecast in a Reuters survey of 15 analysts, which had pointed to a reading of 9.0.

The sub-index for new business in the services sector dropped to 9.1 from 13.8, the lowest reading since the survey was launched.

IHS Markit’s sister survey for manufacturing, published on Monday, also showed activity contracting at its fastest rate on record.

The government’s restrictions, which were in place throughout April, shuttered all services not deemed vital to Italy’s supply chain.

Prime Minister Giuseppe Conte partially eased the lockdown on Monday, allowing more factories to open and greater freedom of movement for ordinary people. Most services remain closed, but bars and restaurants can now offer takeaways.

The composite Purchasing Managers’ Index (PMI) for services and manufacturing plummeted in April to 10.9 from 20.2, also posting the lowest level since the survey began.

The euro zone’s third-largest economy shrank 4.7% in the first quarter from the previous three months, preliminary data showed last week, and the government forecasts gross domestic product to post a full-year contraction of 8.0%.