GLOBAL ECONOMY-Factory activity plunges as coronavirus shock deepens

(Adds U.S. data preview)
* China survey shows improvement in factory activity
* Euro zone, UK manufacturing activity crashes
* South Korea, Japan suffers plunge in factory activity

By Jonathan Cable and Leika Kihara
LONDON/TOKYO, April 1 (Reuters) - Factories fell quiet
across most of Europe and Asia in March as the coronavirus
pandemic paralyzed economic activity, with evidence mounting
that the world is sliding into deep recession.
Manufacturing activity has tumbled, purchasing managers'
index (PMI) surveys showed on Wednesday, with sharp slowdowns in
export powerhouses like Germany and Japan overshadowing a modest
improvement in China.
The virus pandemic has infected more than 850,000 people
around the globe and forced factories, shops and schools to
close amid government-imposed lockdowns.
This has upended supply chains and crushed demand for goods
as consumers worried about job prospects rein in their spending
and stay indoors.
In the euro zone, IHS Markit's final March manufacturing PMI
sank to lowest since mid-2012, when the currency union's debt
crisis was raging, and was well below the mark separating growth
from contraction. EUR/PMIM
Data from the United States later on Wednesday is likely to
show a sharp decline in factory activity there too as
authorities enforce strict lockdown measures to control the
spread of the virus. (reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=USPMI%3DECI
poll)
U.S. consumer confidence has dropped to a near three-year
low as the pandemic shakes people's lives, with a record number
of Americans filing for unemployment benefits. Output from Britain's factories shrank at the fastest pace
since the debt crisis as the spread of coronavirus led to a
spiraling of delays and hammered business confidence. GB/PMIM
"With consumers clamping down on all discretionary spending
in the current uncertain environment, the manufacturing sector
inevitably will struggle further," said Samuel Tombs at Pantheon
Macroeconomics.
Global fund managers polled by Reuters are convinced the
world economy is already in recession, similar to economists'
assessments in another Reuters poll. ASSET/WRAP ECILT/WRAP
As the prospect of a deep recession grows, traders on
Wednesday made a fresh dart for the safety of government bonds,
the dollar .USD= and gold GOL/ . HEALING?
Chinese factory activity improved slightly more than
expected after plunging a month earlier, its PMI showed, but
growth was marginal, highlighting the intense pressure facing
businesses as domestic and export demand slumps.
While factories in China gradually restarted operations
after lengthy shutdowns and a fall in virus cases allowed the
country to start relaxing travel restrictions, activity in South
Korea shrank at its fastest pace in 11 years as many of its
trading partners imposed dramatic measures to curb the virus'
spread.
"If you look at the Korean numbers, they're fairly bad ...
They're likely to get worse still because Korea will be
dependent on parts from Europe and the United States," said Rob
Carnell, Asia-Pacific chief economist at ING in Singapore.
"(Policymakers) have to accept the inevitable that there is
a massive global pandemic here, there is an outbreak in almost
every country globally and certainly in our region, which is
getting to levels that if they don't take very dramatic action,
it's going to get much worse," he said.
Japan's factory activity contracted at the fastest pace in
about a decade in March, adding to views that the world's
third-largest economy is likely already in recession.
A separate "tankan" survey by the Bank of Japan showed
business sentiment soured to a seven-year low in the three
months to March, as the outbreak hit sectors from hotels to
carmakers. "The tankan clearly shows a sharp deterioration in business
sentiment and confirms the economy is already in recession,"
said Yasunari Ueno, chief market economist at Mizuho Securities.
China's Caixin/Markit PMI rose to 50.1 last month from
February's record low of 40.3 and just a notch above breakeven
mark, while South Korea's IHS Markit PMI plunged to its lowest
since January 2009 when the economy was reeling from the global
financial crisis.
In Japan, where the PMI fell to its lowest since April 2009,
the ruling coalition has called on the government to secure a
stimulus package worth at least 60 trillion yen ($553 billion).
"Things are likely to get a lot worse in the months ahead,"
Alex Holmes at Capital Economics said in a note to clients,
noting the survey period for the PMIs likely didn't capture more
recent lockdowns such as those in Malaysia and Thailand.
The consultancy expects global gross domestic product (GDP)
to fall by more than 3% this year.
Policymakers across the globe have announced massive
monetary and fiscal stimulus measures to try to mitigate the
economic fallout from the pandemic, keep cash-starved businesses
afloat and save jobs. But many measures have been short-gap steps to deal with
the immediate damage to corporate funding and shore up banking
systems amid worries of a credit crisis.
The International Monetary Fund has said the pandemic was
already driving the global economy into recession, calling on
countries to respond with "very massive" spending to avoid
bankruptcies and emerging market debt defaults. (Editing by Toby Chopra)