The European economy shrank by a record 3.8% in the first quarter as business activity from hotels and restaurants to construction and manufacturing was frozen by shutdowns aimed at preventing the spread of the coronavirus.

The drop in the 19-country eurozone was the biggest since statistics began in 1995 and sharper than the plunge in the midst of the global financial crisis in the first quarter of 2009 after the bankruptcy of U.S. investment bank Lehman Brothers.

Economists polled by Reuters had expected a 3.5% contraction after a 0.1% quarterly growth in the last three months of 2019.

The drop compares to a 4.8% contraction in the U.S. during the first quarter as the shock from the outbreak hits economies around the world.

Unemployment rose only slightly, however, even amid the massive shutdowns that idled everything from florists to factories. The February jobless figure rose to 7.4% in March from 7.3% in February, statistics agency Eurostat said Thursday. Millions of workers are being supported by temporary short-hours programs under which governments pay most of their salaries in return for companies agreeing not to lay people off.

Economists said they expected that number to increase in the coming months, despite a European Union scheme to help subsidize wages across the 27-nation bloc so that employers cut working hours rather than jobs.

There was more bad news on the inflation front, with consumer prices rising by just 0.4% in April compared with 0.7% the previous month, driven by the collapse in energy prices.

But the slowdown of inflation was smaller than expected by economists, who on average forecast a deceleration to 0.1% year-on-year in April, according to a Reuters poll.

The biggest drag on the overall index came from energy prices, which dropped 9.6% year-on-year. Without the volatile energy and unprocessed food components – what the European Central Bank calls core inflation – prices grew 0.7% on the month for a 1.1% year-on-year increase. In March this measure was an increase of 1.2%.

An even narrower measure of inflation that also excludes alcohol and tobacco prices and is followed by many market economists showed prices going up 0.8% in April and 0.9% year-on-year, against a 1.0% annual increase in March.

"Let there be no mistake: the lockdown is deflationary," Bert Colijn, a senior economist at ING bank, said. "Given that unemployment will almost certainly be higher coming out of the lockdown, price pressures are expected to remain weak for some time to come," he said.

The EU's Economic Affairs Commissioner Paolo Gentiloni said the devastating figures should spur the bloc's bickering leaders to approve a recovery plan big enough to be effective. "The preliminary flash for euro area and EU GDP is a further indication that Europe is experiencing an economic shock without precedent in modern times," he said. "It is vital that the EU rise to this challenge."

The statistics in Europe likely understate the depth of the fall since shutdown measures were mostly put in place only in March, the last of the three months in the quarter.

Colijn said the decline was the worst for the bloc since "at least the start of the 1970s" and warned there was probably worse to come.

"This time it really is different, a recession like the one we're currently in is unprecedented," Colijn wrote in a commentary, noting that the lockdown will have an even greater impact on the coming quarter.

"This points to a much bigger fall in activity in Q2, when the full lockdowns will be in effect for almost half the time and will then be only partially lifted," said Andrew Kenningham, an economist at Capital Economics.

France, Italy fall into recession

Economists noted that in several countries that reported first-quarter GDP numbers, the depth of the recession was linked to the severity of national lockdowns.

"France and Spain have been among the most strict in terms of lockdowns and hence their economies have suffered more. This would suggest that a country like Germany has experienced a smaller-than-average contraction," said Colijn.

Figures from France and Italy showed both countries fell into recession, defined as two-quarters of economic contraction. The French economy shrank 5.8%, the most since the country's statistics agency began keeping the figures in 1949. The drop was particularly pronounced in services that involve face-to-face interaction, such as hotels and restaurants, retail stores, transportation and construction.

In Spain – the eurozone's fourth-largest economy and one of the worst-affected countries by the virus – GDP shrank by 5.2%. Among others, Belgium’s GDP fell 3.9% and Austria’s by 2.5%.

Even normally stable Germany, Europe's economic engine room, had its share of misery on Thursday as the jobless total soared from 2.3 million in March to 2.6 million in April.

The figures came ahead of a meeting of the European Central Bank, which analysts thought may expand its bond purchase program that supports governments and borrowing markets. That decision may not come Thursday but markets are awaiting an assessment from bank head Christine Lagarde.