HomeBusinessWorld factory activity mired...

World factory activity mired in slump as China, growth slowdown take toll

  • Euro zone factory activity contracts sharply in July
  • China’s July private PMI marks first fall since April
  • Factory activity in Japan, South Korea contract
  • US, Canada activity stabilizes, Mexico hits 7-year high

LONDON/TOKYO/WASHINGTON, Aug 1 (Reuters) – Global factory activity remained in a slump in July, private surveys showed on Tuesday, a sign slowing growth and weakness in China were taking a toll on the world economy, though the picture in the Americas was notably less bleak than elsewhere.

The downturn highlighted the dilemma for policymakers who embarked on aggressive monetary policy tightening cycles in a battle to keep inflation at bay and yet also need to try and forestall potential recessions.

S&P Global’s gauge of worldwide manufacturing activity held steady at 48.7 in July, matching the lowest level since June 2020, with subindices of factory output and new orders both slipping to six-month lows. A reading below 50 marks a contraction in activity.

A Purchasing Managers’ Index (PMI) covering the euro zone as a whole showed manufacturing activity contracted in July at the fastest pace since COVID was cementing its grip on the world as demand slumped despite factories cutting their prices sharply.

There was considerable weakness in Germany, Europe’s largest economy, while France and Italy, the second- and third-largest euro zone economies, also recorded marked deteriorations since June.

HCOB’s final euro zone manufacturing PMI, compiled by S&P Global, fell to 42.7 in July from June’s 43.4, its lowest reading since May 2020 and matching a preliminary figure.

An index measuring output, which feeds into a composite PMI due on Thursday and is seen as a good gauge of economic health, dropped to 42.7 from 44.2, a low not seen in more than three years.

The manufacturing downturn in Germany deepened at the start of the third quarter as goods producers recorded sharper declines in new orders, data showed.

Meanwhile, France’s factory sector contracted further in July, although the downturn was not quite as bad as first forecast.

“Today’s PMI results are an indicator of the ongoing uncertainty that the euro zone manufacturing sector is currently facing,” said Thomas Rinn, global industrial lead at Accenture.

“Demand is going through a rocky patch. Dwindling output coupled with the knock-on effects of inflation, labour shortages and shifting customer preferences, all continue to put a squeeze on businesses.”

In Britain, outside the European Union, factory output contracted in July at the fastest pace in seven months, hit by higher interest rates and fewer new orders, despite weakening price pressures.


Japan, South Korea, Taiwan and Vietnam saw manufacturing activity contract in July, surveys showed, highlighting the strain sluggish Chinese demand is inflicting on the region.

Workers walk in a street in Beijing, China, July 14, 2023. REUTERS/Thomas Peter/file photo License this content on Reuters Connect

China’s Caixin/S&P Global manufacturing PMI fell to 49.2 in July from 50.5 in June, missing analysts’ forecasts of 50.3 and marking the first decline in activity since April.

The data was in line with the government’s official PMI reading on Monday, raising challenges for policymakers seeking to revive momentum in China’s post-COVID recovery.

“Manufacturing PMIs remained in contractionary territory across most of emerging Asia last month and the underlying data point to further weakness ahead,” said Shivaan Tandon, emerging Asia economist at Capital Economics.

“Falling new orders, bleak employment prospects and high inventory levels point to subdued factory activity in the coming months.”

Japan’s final au Jibun Bank PMI fell to 49.6 in July, from 49.8 in June, due to weak domestic and overseas demand.

South Korea’s PMI stood at 49.4 in July, up from 47.8 in June but staying below the 50-threshold, a survey by S&P Global showed.

Taiwan’s manufacturing PMI fell to 44.1 in July from 44.8 in June, while the index for Vietnam rose to 48.7 from 46.2, surveys showed.

In India, growth in manufacturing activity slowed for a second straight month, but the pace of expansion remained healthy and beat expectations.

Asia has been among the few bright spots in the global economy, though China’s slowdown clouds the outlook.

In revised forecasts issued in July, the International Monetary Fund projected emerging Asia’s economic growth will accelerate to 5.3% this year from 4.5% in 2022. It expects China’s economy to expand 5.2% this year after a 3.0% increase in 2022.


In contrast with Asia and Europe, factory activity in the U.S., Canada, Brazil and Mexico was more stable. Activity in Mexico, in fact, bucked the wider downturn trend and expanded to a seven-year high with improvements seen in both output and new orders.

U.S. manufacturing, meanwhile, appeared to stabilize at weaker levels amid a gradual improvement in new orders, but factory employment dropped to a three-year low, suggesting that layoffs were accelerating.

The Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI edged up to 46.4 last month from 46.0 in June, which was the lowest reading since May 2020. It was the ninth straight month of contraction.

PMI gauges in Canada and Brazil both ticked closer to the break-even 50 mark. Canada’s PMI came in at 49.6, with output expanding modestly at the highest rate since February. In Brazil, activity contracted for the ninth straight month, but at 47.8 the country’s PMI was the highest since February.

Reporting by Leika Kihara, Jonathan Cable, Lucia Mutikani, Dan Burns and Fergal Smith; Editing by Sonali Paul, Susan Fenton and Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

Source link

Most Popular


Please enter your comment!
Please enter your name here

More from Author

On the radar: Three Cabinet Secretaries to appear before Senators

Cabinet Secretaries Kithure Kindiki (Interior), Mithika Linturi (Agriculture) and...

Strus’ 59-foot buzzer beater lifts Cavs over Mavs

CLEVELAND — The best pass of Evan Mobley’s life, the...

Read Now

Jon Stewart breaks down in tears as he shares sad news with Daily Show viewers

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emailsSign up to our free breaking news emailsJon Stewart broke down in tears as he shared some sad news with The Daily Show viewers on Monday (26 February)....

Stock futures inch lower Wednesday as investors await fresh inflation data: Live updates

Traders on the floor of the New York Stock Exchange on April 14, 2022.Source: NYSEStock futures ticked lower Wednesday as investors looked ahead to a key inflation report due later this week.Futures tied to the Dow Jones Industrial Average slipped 40 points, or 0.1%. S&P 500...

On the radar: Three Cabinet Secretaries to appear before Senators

Cabinet Secretaries Kithure Kindiki (Interior), Mithika Linturi (Agriculture) and Zacharia Njeru (Water) are scheduled to appear before the Senate plenary.The trio will appear to respond to questions from members. Kindiki is expected to provide a status update on investigations into the inter-communal clashes that occurred...

Strus’ 59-foot buzzer beater lifts Cavs over Mavs

CLEVELAND — The best pass of Evan Mobley’s life, the worst tackle of Caris LeVert’s and only the second-best buzzer beater to win a game in Max Strus’ nearly 28 years on this planet.This is what pandemonium looked like Tuesday night in Cleveland.Strus unleashed a 59-footer...

Texas’ win marred as angry TTU fans throw bottles

LUBBOCK, Texas -- Dylan Disu scored 21 points, Max Abmas added 18 and Texas rode a big first half to a 81-69 victory over Texas Tech on Tuesday night in a game that included a significant delay after fans threw objects onto the floor.Midway through the...

UAE vs Canada, ICC Cricket World Cup League 2, Live Score: Toss At 11:00 AM IST

UAE vs Canada Live Score: UAE will take on Canada in the 7th match of the ICC World Cup League 2 2023-2027. UAE will be keen to perform well and qualify for the ODI World Cup 2027. UAE have named a strong squad for the series,...

Apple kills its electric car project: sources

STORY: Apple has hit the brakes on its project to create an electric car a source told Reuters Tuesday its cancelling work on the idea altogether.Bloomberg , which also reported the development, said employees working on Apple’s EV will shift instead to a unit for AI.Apple...

Nintendo Sets Its Sights On Switch Emulator Yuzu In New Lawsuit

When he’s not paying off a loan to Tom Nook, Liam likes to report on the latest Nintendo news and admire his library of video games. His favourite Nintendo character used to be a guitar-playing dog, but nowadays he prefers to hang out with Judd the...

Royals mourn Prince Michael of Kent’s son-in-law – BBC News

By Sean CoughlanRoyal correspondent27 February 2024Updated 9 hours agoImage source, Lady Gabriella Kingston/ Buckingham PalaceA Buckingham Palace spokesman said that King Charles and Queen Camilla "join Prince and Princess Michael of Kent and all those who knew him in grieving a much-loved member of the family".He...

3 keys to BYU’s stunning 76-68 win over No. 7 Kansas

LAWRENCE, Kansas — BYU picked up its biggest win in the Mark Pope era Tuesday night at Phog Allen Fieldhouse, stunning No. 7 Kansas 76-68 in a pivotal Big 12 game.The Cougars (8-7, 20-8) trailed by as many as 12 points in the second half before...

Ole Anderson, Original Member of Four Horsemen Wrestling Team, Dies at 81

Ole Anderson, a professional wrestler who starred as an original member of the Four Horsemen team in the 1980s and was later critical of the sport’s corporate greed, died on Monday. He was 81.The Carter Funeral Home in Winder, Ga., said that Mr. Anderson had died...

Toyota Recalls Over 600,000 Trucks and SUVs Over Safety Concerns

More than 600,000 Toyota pickup trucks and SUVs in the United States were voluntarily recalled over the past week because of different issues that could increase the risk of crashes, the vehicle manufacturer said.The first announcement, on Feb. 21, stated that about 280,000 vehicles, including Toyota...