EcoWeek

The collapse of economic activity has been confirmed

Eco week 20-13 // 3 April 2020  
economic-research.bnpparibas.com  
6
ECONOMIC PULSE  
EUROZONE: THE COLLAPSE OF ECONOMIC ACTIVITY HAS BEEN CONFIRMED  
Looking at the economic data for the euro area that has emerged below its historical average, represented by the 0 point on the chart.  
recently, the conclusion is clear: we are seeing an unprecedented  
It is important to note that most of the data on the chart relate to  
economic contraction in the service sector. As the chart below shows,  
the month of February and thus predate the lockdowns in eurozone  
the average eurozone service sector PMI plummeted in Q1 2020, well  
member states. Tangible figures for the euro area as a whole in March  
below its long-term average. At 28.4, the March index was the lowest  
(
retail sales, unemployment, exports) will only be published in late  
on record. The contraction in manufacturing seems to be less severe  
April or early May. These indicators will also show significant falls,  
perhaps at new record levels.  
(
44.5), but is nevertheless at an historically low level; the average  
manufacturing PMI in Q1 was slightly above that in the previous quarter.  
It is worth noting that the manufacturing sector in the Netherlands –  
where the lockdown is less drastic – remained slightly in expansionary  
territory in March with a PMI of 50.5.  
The trend in the labour market prior to the health crisis was positive:  
the eurozone unemployment rate was 7.3% in February, its lowest level  
since March 2008. However, the record rise in Spanish unemployment  
claimants in March (up 302,300 according to national statistics) shows  
the scale of the economic and social challenges that eurozone govern-  
ments will face in the coming months.  
PMI data also pointed towards low levels of inflation over the next  
few months. The sub-indices for production costs and selling prices  
have both dropped sharply. Most notably, manufacturing companies  
highlighted the impact of falling oil, steel and paper prices on produc-  
tion costs. This will eventually feed through into the HCPI harmonised  
consumer price index. The underlying price index was, in Q1, already  
Guillaume Derrien  
QUARTERLY CHANGES  
-month moving average (actual)  
3
-
-- 3-month moving average (4 months ago)  
Effective Exchange Rate  
3
2
1
0
,0  
,0  
,0  
,0  
Core HICP  
PMI Manufacturing  
Unemployment Rate  
PMI Services  
-
-
-
1,0  
2,0  
3,0  
Real Money  
Supply M1  
PMI  
Employment  
Retail Sales  
PMI New Export Orders  
industrielle  
Economic Confidence  
Business Climate Indicator  
SOURCE: THOMSON REUTERS, BNP PARIBAS  
The indicators in the radar are all transformed into z-scores. By construction, the z-scores have mean zero and their values, which indicate how  
far the indicator is removed from its long-term average, are in the interval between -3 and 3 in almost all cases. In the radar chart, the blue area  
shows the actual conditions of economic activity. It is compared with the situation four months earlier (dotted-line). An expansion of the blue  
area signals an improvement.  
The bank  
for a changing  
world  
QUI SOMMES-NOUS ? Trois équipes d'économistes (économies OCDE, économies émergentes et risque pays, économie bancaire) forment la Direction des Etudes Economiques de BNP Paribas.
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