CBA bank’s latest Purchasing Managers Index (PMI) shows a massive plunge in economic activity and confidence.
The March 20 index, which surveys 800 Australian companies in the manufacturing and service sectors, dropped from 49.0 to 40.7, the steepest reduction since data collection began in 2016.
The survey measures how output, orders, jobs, delivery times and stocks have changed relative to the previous month.
CBA said this ‘reflects (a) severe decline in business activity and one-year confidence in March.’
The survey is the first piece of economic data to include the impact of the coronavirus, and the news is bad.
It is unlikely to be the low as anecdotal evidence from manufacturers indicates falling orders, especially in retail-exposed sectors.
Commonwealth Bank’s Michael Blythe said: “The services sector is being hit hard by the cancellation of events, general fears about social interaction and a very sharp decline in offshore demand as travel restrictions bite.
“The manufacturing sector is faring a little better.”
But Blyth said the leading indicators for manufacturing were flashing red.
“The deterioration in supplier delivery times is accelerating, highlighting the disruption to supply chains.
“And the lower Aussie dollar is pushing input prices up at a rapid rate”.
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