March 16, 2020

IHS Markit: Firms Cautious As COVID-19 Virus Spreads

IHS Markit’s Global Business Outlook for February showed that the net balance of global firms predicting output to rise over the coming year minus those predicting it will decline is at +18 percent in February, up only marginally from the decade low of +14 percent last October. The February report was among the weakest since the global financial crisis. IHS Markit called the reading “subdued” due to the outbreak of COVID-19 and warned “the latest survey was conducted prior to the more significant spread of the virus outside east Asia, and so the data are most clearly impacted in China and Japan.”

In its business outlook for China, IHS Markit said “Chinese companies anticipate that business activity will rise only fractionally over the next year.” China’s reading reflected the lowest level of sentiment since the series was first reported in late 2009. The report also said manufacturers have revised down their growth forecasts, with the net balance of firms expecting higher output falling from +17 percent in the previous survey to +9 percent, the second-lowest figure in 11 years. According to IHS Markit, the recent outbreak of COVID-19 was “the most widely cited factor weighing on business confidence in the latest survey period. Firms anticipate the virus to continue to disrupt business activity through supply chain delays, travel restrictions, labor shortages and reduced client spending.”

Click here to read business outlook reports for several other countries.