Stocks sink as US manufacturing shrinks at ‘unprecedented rate’
US markets fell as trading opened today as manufacturing slumped at an unprecedented rate in April due to economic shutdowns caused by coronavirus.
The S&P 500 fell 1.9 per cent to 2,856.14 points, the Dow Jones dropped 1.8 per cent to 23,901.77, and the Nasdaq fell 2.1 per cent to 2852.28.
US factories saw output slump to 36.1 in April, according to IHS Markit’s Purchasing Managers’ Index (PMI) data. Anything below 50 represents a contraction.
The fall represents the lowest reading in 11 years, driven by the steepest decline in manufacturing output on record.
New orders, client demand and overseas sales all imploded as production hit lower levels than those recorded during the 2008-2009 financial crisis.
Chris Williamson, chief business economist at IHS Markit, said: “With orders collapsing at a rate not seen for over a decade, supply chains disrupted to a record degree and pessimism about the outlook hitting a new survey high, rising numbers of firms are culling payroll numbers”.
Over 30m people in the US have filed for unemployment benefits in the last six weeks, more than three times the number that did so during the financial crisis.
Markets were already reeling after president Donald Trump late last night threatened to slap further tariffs on China due to the coronavirus crisis.
Speaking last night, Trump said that his much-touted trade deal with China was now less important than the pandemic, with his administration discussing retaliatory measures.
The comments sparked fears amongst businesses that the economy could be set for a return to the uncertainty that gripped it for two years while Trump negotiated the original deal.