Coronavirus lockdown batters German services in April - PMICoronavirus lockdown batters German services in April - PMI
Spread of coronavirus disease (COVID-19) in Dresden

BERLIN (Reuters) – Germany’s services sector recorded its weakest ever performance in April due to the coronavirus pandemic, pulling down overall private sector activity in Europe’s largest economy to historically low levels, a survey showed on Wednesday.

IHS Markit’s final composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors, plummeted to a record low of 17.4 from 35.0 in March.

The PMI for the services sector fell even further, hitting an unprecedented low of 16.2 in April, down from 31.7 in the previous month, the survey showed.

Both readings came in slightly higher than flash estimates released on April 23.

Among the sectors hit hardest by lockdown measures to contain the spread of the highly contagious coronavirus were hotels, restaurants, private education providers and recreation and cultural services.

Phil Smith, principal economist at IHS Markit, said the plunge in services business activity accelerated in April and that the rate of contraction was much worse than seen during the depths of the global financial crisis more than a decade ago.

“However, though manufacturing also suffered a record drop in output in April, the PMI surveys confirm that the decline in Germany’s economy has been less severe than in France, Italy and Spain, where lockdowns have been more strict,” Smith added.

Germany took a further step on the long road back to post-coronavirus normality on Monday, with museums and hairdressers reopening under strict conditions, churches opening their doors for worshippers and more car factories resuming work.

But more than a month after all but essential social and commercial life was suspended to slow the spread of the novel coronavirus, the country’s politicians are at odds over how far and how fast to move.

Despite first steps to ease restrictions, there is still a lot of uncertainty among businesses about the timing of further relaxation of measures and the health of demand going forward, Smith noted.

“The uptake of short-time work has been on an unprecedented scale, yet the record job losses in April clearly show that businesses aren’t expecting a full recovery in activity anytime soon,” he added.

The government expects the pandemic to plunge the economy into its deepest recession since World War Two, predicting gross domestic product will shrink by 6.3% this year. Adjusted for calendar effects, the economy is seen contracting by 6.7%.

(Reporting by Michael Nienaber; Editing by Catherine Evans)