German March final services PMI points to first jobless rate rise since 2009

Credit: REUTERS/DADO RUVIC

BERLIN, April 3 (Reuters) - German services firms shed staff at the fastest rate in almost 23 years in March, a survey showed on Friday, giving a glimpse of the damage done to the job market as businesses close to limit the spread of coronavirus.

IHS Markit's survey showed the extent of job losses to be expected in the coming months in Europe's largest economy, which in March shuttered restaurants, malls, schools, hotels, fitness studios and other businesses to help contain COVID-19.

Markit's final services index plunged to 31.7 from 52.5 in February, lower than the flash reading of 34.5 and well below the 50.0 mark that separates growth from contraction.

"The unprecedented drop in services business activity in March makes the impact of the COVID-19 pandemic and resulting efforts to contain the spread of the virus all too clear," said Phil Smith, principal economist at IHS Markit.

"The damage to the economy has been abrupt and widespread, with those sectors hit particularly hard by social distancing and other containment measures, such as hotels and restaurants, coming to a complete standstill," he added.

The final composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, fell to 35.0 from 50.7 in February. That was lower than the flash reading of 37.2.

The government has launched an unprecedented 750 billion euros package to mitigate the economic impact of the outbreak. It includes 10 billion euros this year alone in state aid for short-term work schemes for companies to protect workers from layoffs.

"The extent of the job losses highlighted by the survey data mean we can expect to see the first discernible increase in Germany's unemployment rate since the global financial crisis," said Smith.

He added: "The hope is, however, that extensive use of the government's short-time work scheme can save some jobs that would have otherwise been lost and support incomes during the downturn."

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

To subscribe to the full data, click on the link below: https://www.ihsmarkit.com/about/contact-us.html

For further information, please phone IHS Markit on +800 6275 4800 or email economics@ihsmarkit.com

(Reporting by Joseph Nasr; Editing by Hugh Lawson)

((joseph.nasr@thomsonreuters.com; +49 30 2888 5085; Reuters Messaging: joseph.nasr.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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