In order to get a feel about how the Covid-19 pandemic has influenced activity in 2020, it is sufficient to look at one single chart, the composite PMI. Data plunged globally in March and troughed at very low levels in April. The third quarter saw strong activity with readings above the crucial 50 level in most countries. Under the influence of a new wave of infections, sentiment dropped again in the eurozone in November. In the US on the other hand, the index remained well above 50. The profile in China was different. The big drop in sentiment occurred in February and as of May, the composite PMI has been firmly above 50, reflecting the V-shaped recovery. The turnaround in India has also been impressive. In Japan on the other hand, the index has been below throughout the year, except for the month of January.
Concerning the manufacturing PMI, in December the world index stabilised at 53.8. Several countries saw a further improvement, starting from an already high level: Canada, the US, the eurozone, Germany, the Netherlands, Switzerland, the UK, Czech Republic. In France, the index passed above the 50 hurdle. India stabilised at a high level but the index declined somewhat in China.
The readings for the new export orders remain below those of the manufacturing PMI. The world index declined slightly in December but remains above 50. The situation improved for the eurozone on the back of better numbers for France, Italy, Spain and, in particular, the Netherlands. Japan recorded a further weakening. China data also declined. The declines were even bigger in India, Indonesia and Hong Kong
In December, the US services PMI recorded a considerable drop -although the services PMI of the Institute of Supply Management saw a strong increase- whereas the index rebounded in the eurozone to 46.4 with the readings jumping in France and Spain. In China, the services PMI declined somewhat but remains at a high level (56.3).
Unsurprisingly, the numbers for manufacturing employment remain well below those of the manufacturing PMI. It reflects caution in terms of hiring plans of companies in sectors which are doing fine whereas in sectors which continue to suffer from the pandemic, the risk remains high of seeing a further reduction of employment levels. In December, there was a slight improvement in the US and the eurozone. Whereas the numbers weakened in Germany, they were better in France –moving above 50-, Ireland, Italy and the Netherlands. In India and Indonesia, they remain well below 50.
COMPOSITE PMI
MANUFACTURING PMI
SERVICES PMI
MANUFACTURING PMI – NEW EXPORT ORDERS
MANUFACTURING PMI – EMPLOYMENT
