Factories fell quiet across much of the world in March as the coronavirus pandemic paralyzed economic activity, with evidence mounting that the world is sliding into deep recession.
Manufacturing activity has tumbled, purchasing managers' index (PMI) surveys showed on Wednesday, with sharp slowdowns in export powerhouses like Germany and Japan overshadowing a modest improvement in China. In the United States, one widely followed survey showed the contraction in output was not as dramatic as feared, but new orders slumped to an 11-year low, signalling the worst is still to come.
The virus pandemic has infected more than 850,000 people around the globe and forced factories, shops and schools to close amid government-imposed lockdowns.
This has upended supply chains and crushed demand for goods as consumers worried about job prospects rein in their spending and stay indoors.
In the eurozone, IHS Markit's final March manufacturing PMI sank to its lowest since mid-2012, when the currency union's debt crisis was raging, and was well below the mark separating growth from contraction.
Markit's final reading of US activity in March showed output at its slowest since 2009, with coronavirus-related supply shortages a key factor in the decline. In a competing survey from the Institute for Supply Management, the forward-looking new orders sub-index dropped to the lowest since March 2009.
Meanwhile, private-sector US employers cut the most jobs in two-and-a-half years in March, according to the ADP National Employment Report, which probably underestimates the scope of job losses because the survey period ended before the most sweeping social-distancing efforts took effect. In one week in mid-March alone, a record 3.3 million Americans sought unemployment benefits for the first time, and another 3.5 million or more are expected to have sought assistance last week.
Output from Britain's factories shrank at the fastest pace since the debt crisis as the spread of coronavirus led to a spiraling of delays and hammered business confidence.
In Canada, factory activity was the slowest since October 2010.
Global fund managers polled by Reuters are convinced the world economy is already in recession, similar to economists' assessments in another Reuters poll.
As the prospect of a deep recession grows, traders on Wednesday made a fresh dart for the safety of government bonds, the dollar and gold.
CHINA HEALING?
Chinese factory activity improved slightly more than expected after plunging a month earlier, its PMI showed, but growth was marginal, highlighting the intense pressure facing businesses as domestic and export demand slumps.
While factories in China gradually restarted operations after lengthy shutdowns and a fall in virus cases allowed the country to start relaxing travel restrictions, activity in South Korea shrank at its fastest pace in 11 years as many of its trading partners imposed dramatic measures to curb the virus' spread.
Japan's factory activity contracted at the fastest pace in about a decade in March, adding to views that the world's third-largest economy is likely already in recession.
A separate "tankan" survey by the Bank of Japan showed business sentiment soured to a seven-year low in the three months to March, as the outbreak hit sectors from hotels to carmakers.
"The tankan clearly shows a sharp deterioration in business sentiment and confirms the economy is already in recession," said Yasunari Ueno, chief market economist at Mizuho Securities.
China's Caixin/Markit PMI rose to 50.1 last month from February's record low of 40.3 and just a notch above the breakeven mark, while South Korea's IHS Markit PMI plunged to its lowest since January 2009 when the economy was reeling from the global financial crisis.
In Japan, where the PMI fell to its lowest since April 2009, the ruling coalition has called on the government to secure a stimulus package worth at least 60 trillion yen ($553 billion).