New York Federal Reserve’s Empire State Manufacturing survey posted the largest drop on record between February and March, as its overall index of business conditions fell to its lowest level since 2009. The survey noted a leveling off of employment, drop in average workweek and deterioration in firms’ optimism about the near-term outlook amid the coronavirus as cause for the decline.
A subsequent report from the regional Philadelphia Federal Reserve showed a similar “significant weakening in regional manufacturing activity,” as general business activity, new orders and shipments dropped “precipitously,” according to the bank.
As these reports rolled in, economists slashed their expectations for economic output in the U.S. Goldman Sachs economists said last week they expect a quarter-on-quarter annualized drop of 24% in U.S. gross domestic product (GDP) in the second quarter, and full-year output of -3.8% on an annual average basis.
Morgan Stanley economists on Sunday predicted an even steeper drop for the next quarter – they see U.S. GDP dropping at an annual rate of 30.1% in the April through June period.
IHS Markit’s latest data bolsters the evidence of a contraction in U.S. economic activity.
“The survey underscores how the U.S. is likely already in a recession that will inevitably deepen further,” Williamson said. “The March PMI is roughly indicative of GDP falling at an annualized 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.”
Other countries’ data have also underscored economic deterioration as the coronavirus outbreak grips the world. The eurozone economy saw “an unprecedented collapse in business activity in March as the coronavirus intensified,” IHS Markit said, with the region’s flash PMI released earlier Tuesday more than 20 points to 31.4, its worst reading on record.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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