Markit reports US Output Drops at Fastest Rate For Over a Decade

Key Findings

  • Flash U.S. Composite Output Index at 40.5 (49.6 in February). New series low.
  • Flash U.S. Services Business Activity Index at 39.1 (49.4 in February). New series low.
  • Flash U.S. Manufacturing PMI at 49.2 (50.7 in February). 127-month low.
  • Flash U.S. Manufacturing Output Index at 47.6 (50.7 in February). 127-month low.

U.S. private sector firms indicated a marked contraction in overall business activity in March following the escalation of the coronavirus disease 2019 (COVID-19) outbreak. The overall decline was the steepest recorded since comparable survey data were available in October 2009, and reflected widespread falls in activity.

Companies also reported the first contraction of new business since data collection began. The marked decrease in new orders stemmed from sharp falls in client demand following the outbreak of COVID-19, according to panel members. Lower customer demand was also reflected in falling new export orders, with key export partners shutting down or limiting the size of their orders.

Manufacturers and service providers both noted a drop in total new business, with the latter once again seeing the sharper rate of decline. Firms meanwhile reduced their workforce numbers at the fastest pace since December 2009 in March. The decline in employment partly stemmed from a sharp fall in the level of outstanding business, with a number of businesses noting that customers were putting orders on hold until further notice due to COVID-19.

March data also indicated a weakening of inflationary pressures, as both average input prices and output charges fell at U.S. private sector firms. The decline in selling prices was the fastest in the ten-and-a-half year series history, as manufacturers and service providers both cut their prices to boost sales.

Chris Williamson, Markit Chief Business Economist

The survey underscores how the US is likely already in a recession that will inevitably deepen further. The March PMI is roughly indicative of GDP falling at an annualised rate approaching 5%, but the increasing number of virus-fighting lockdowns and closures mean the second quarter will likely see a far steeper rate of decline.

5% is amazingly optimistic.

Note that Goldman Projects a Catastrophic GDP Decline Worse than Great Depression.

Goldman Sachs economists forecast a historically sharp and swift recession, with second-quarter GDP sinking a stunning 24% after a 6% decline in the first quarter.

RECOMMENDED ARTICLES

Goldman expects a huge third-quarter rebound as does Morgan Stanley. I don't.

The Huge Fear: How Do I Pay the Bills?

Please note the Huge Fear: The Huge Fear: How Do I Pay the Bills?

That fear will linger a long, long time.

It is nearly crazy to project a fast rebound from this disaster.

Largest Collapse in Eurozone Business Activity Ever

Also note the Largest Collapse in Eurozone Business Activity Ever

This is not a 911 replay, nor is it anything the Fed or central banks can fix.

Nothing is Working Now: What's Next for America?

The US, EU, and China are in recession now. The only questions are how deep and for how long.

For a 20-point discussion of what I believe will happen, please see Nothing is Working Now: What's Next for America?

Mike "Mish" Shedlock

PMI "Consistent with GDP Growing at an Annualized rate of Just 1.2%"

The Markit composite PMI is barely above contraction level. Economic activity in the US is at the stall rate.

Housing Least Affordable in a Decade

It takes 23.6% of median income to make the monthly payment on the average-priced home.

US Gov't Bonds Yield More Than Developed Countries For 1st Time in Two Decades

US Treasury yields are rip-roaring vs other developed countries. The bet is on inflation.

China Builds Infrastructure, US Drops Bombs

Obama bombed 7 nations. Trump threatens Iran. Meanwhile, China builds infrastructure. Its foreign policy makes sense.

Remaking the TPP Without the US: US Ag Exports to Japan Will Plunge

The US left the TPP when Trump took office. The world moved on. It's now the CPTPP. Some call it the anti-Trump pact.

US, Germany, Japan in Manufacturing Recessions: Full-Blown Recessions Coming Up

The US, Japan, Germany, and the Eurozone manufacturing PMIs are in contraction. Recessions will follow.

Decade of Negative Real Interest Rates: Who Benefited?

Rudy Havenstein Tweeted an interesting chart earlier today on real negative interest rates.

US Will Follow Germany, Eurozone, China Into Recession

European manufacturing continues to dive, led by Germany. The US will follow.

Italy Heads for 2nd Lost Decade, Entire Eurozone on Verge of Contraction

Italy's GDP is still below the 2008 level. PMIs from Germany and Italy show the entire eurozone on verge of contraction.