(Bloomberg) --
Italian manufacturing suffered a record drop in output in March, when the entire country went into lockdown to contain the coronavirus pandemic that's killed thousands.
While the disease has spread rapidly to other countries, Italy's northern industrial heartland was one of the first places to see a surge in cases, and localized quarantines came into force in late February. As the measures expanded, that closed down businesses across the country.
The March Purchasing Managers Index for Italy fell to 40.3, the lowest since 2009, from 48.7 in February. Only 11% of survey respondents reported an increase in production on the month, and a measure of output plunged to a record low.
The euro-area PMI manufacturing index stood at 44.5, well below the 50 mark that separates expansion from contraction.
The Italian government has responded with a huge spending pledge on the health care response and to help businesses and workers. But with the economy shrinking and spending rising, that will fuel another jump in the country's debt ratio, which is already the highest in the euro area after Greece.
The European Central Bank is keeping a lid on the borrowing costs of Italy and other euro-area nations with its latest bond-purchase program, and European finance ministers are discussing other options to help.
The Italian PMI also showed a sharp drop in export demand in March, and the lowest reading for business sentiment since that series began in 2012. The picture is being replicated across Europe as governments impose restrictions to contain the coronavirus.
©2020 Bloomberg L.P.
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