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The numbers: The IHS Market flash purchasing managers index for services in April fell to a record low, while the manufacturing PMI weakened to the lowest level in 11 years.
The flash services PMI fell to 27 from 39.8 in March while the manufacturing PMI dropped to 36.9 from 48.5.
Any reading below 50 indicates worsening conditions. The “flash” reading is based on approximately 85% of the final number of replies received each month.
What happened: The cancellation of orders has led firms to reduce their workforce at the start of the second quarter. Input prices have dropped at the fastest pace on record. Business confidence turned pessimistic for the first time since the series was started in 2012.
Overseas readings were also terrible. The flash eurozone services PMI slumped to a record low 11.7 in April, with Germany’s services PMI skidding to 15.9.
What IHS Markit said: “The scale of the fall in the PMI adds to signs the second quarter will see an historically dramatic contraction in the economy, and will add to worries about the ultimate costs of the fight against the pandemic,” said Chris Williamson, chief business economist at IHS Markit.
Big picture: The coronavirus shutdown has led to a sharp contraction across the country. The services sector can normally hold its own during a recession, but the social distancing has decimated the sector.
Market reaction: U.S. equity benchmarks opened higher on Thursday. The S&P 500 SPX, +0.81% index was up 18 points in early trading.
