{"id":13245,"date":"2020-02-27T18:40:36","date_gmt":"2020-02-27T17:40:36","guid":{"rendered":"https:\/\/lazardfreresgestion-tribune.fr\/?p=13245"},"modified":"2020-02-27T18:44:47","modified_gmt":"2020-02-27T17:44:47","slug":"coronavirus-an-initial-impact-on-confidence-indicators","status":"publish","type":"post","link":"https:\/\/latribune.lazardfreresgestion.fr\/en\/coronavirus-an-initial-impact-on-confidence-indicators\/","title":{"rendered":"Coronavirus: an initial impact on confidence indicators"},"content":{"rendered":"

Chart of the week<\/h2>\n

Markit has published February\u2019s flash PMI confidence surveys for the United States, the Eurozone and Japan. They were keenly awaited: the Chinese economy has stalled as a result of the coronavirus outbreak, sparking fears of a global downturn in confidence.<\/p>\n

The fall in both the US and Japanese composite PMIs (respectively -3.7 to 49.6 and -3.1 to 47.0) reflects those fears, with the services PMIs falling more than their manufacturing counterparts in both cases.<\/p>\n

In the Eurozone, confidence levels look more resilient at first glance. Indeed, the composite PMI reading even improved marginally, +0.3 to 51.6, as France\u2019s services sector returned to normal following strike action in December and the German manufacturing PMI continued to improve (+2.5 to 47.8).<\/p>\n

\"\"<\/h2>\n

Our analysis<\/b><\/h2>\n

China\u2019s coronavirus epidemic will significantly affect both Chinese and global growth with deteriorating confidence outside China being the primary vector of the epidemic\u2019s economic impact. The survey data show falling new export orders and longer delivery times.<\/p>\n

Delivery times are notably longer in Germany, which partially explains the improvement in the manufacturing PMI: longer delivery times are usually a good sign. In this particular case, as they likely reflect production line disruptions rather than strong demand, they are a \u2018false\u2019 good sign.<\/p>\n

As things stand, our core scenario remains that of a temporary supply shock: a sharp slowdown followed by a catch-up resulting in a V-shaped quarterly growth curve. If this scenario materialises, economic growth fears should abate and enable confidence levels to recover.<\/p>\n

However, both the extent and duration of the supply shock currently remain unclear. Everything hinges on the progress of the epidemic, pace of China\u2019s recovery, and the impact on global production lines. With the recovery in China looking sluggish and the virus now gripping South Korea and Italy, the overall outlook is less than comforting.<\/p>\n

 <\/p>\n

T<\/i>he <\/i>Purchasing Managers’ Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors.<\/i><\/p>\n

 <\/p>\n

United States: manufacturing resistant despite halt in 737 Max production<\/a><\/p><\/blockquote>\n