Coronavirus exploded in China in January and February and the economic data showed a deep contraction for that period. Although, China seems to be getting out of the coronavirus hole now, so this might not turn into a deep recession in China. Although, the virus has spread across the globe now, which is closing down.

This will surely hurt the Chinese economy as well, since the demand for Chinese goods will decline, as people get locked down in the West and their income will surely fall. Today’s services and manufacturing report from Europe showed a deep contraction, especially in the services sector. Below are the French, German and Eurozone manufacturing and services reports:

French Services and Manufacturing PMI

• March flash services PMI 29.0 points vs 40.0 expected
• February stood at 52.5 points
• Manufacturing PMI 42.9 vs 40.6 expected
• February manufacturing at 49.8 points
• Composite PMI 30.2 vs 38.1 expected
• February Composite at 52.0 points

German Services and Manufacturing PMI

• March flash manufacturing PMI 45.7 points vs 39.9 expected
• February manufacturing at 48.0 point
• Services PMI 34.5 points vs 43.0 expected
• February services at 52.5 points
• Composite PMI 37.2 vs 41.0 expected
• March composite 50.7 points

Eurozone Services and Manufacturing PMI

• March flash services PMI 28.4 points vs 39.5 expected
• February services at 52.6 points
• Manufacturing PMI 44.8 points vs 39.0 expected
• February manufacturing at 49.2 points
• Composite PMI 31.4 points vs 38.8 expected
• February composite PMI at 51.6 points

The manufacturing activity has declined indeed, but not as much as expected. On the other hand, the services data is showing a deeper contraction in this sector. This looks pretty bad and I expect it to get worse in April and probably in May. So, dark times are here again and they seem darker than in the 2008-09 financial crisis.