Global factory activity stays weak, uncertainty on China clouds outlook
Send a link to a friend
[December 01, 2023] By
Jonathan Cable and Leika Kihara
LONDON/TOKYO (Reuters) -Global manufacturing activity remained weak in
November on soft demand, surveys showed on Friday, as euro zone factory
activity kept contracting, while there were mixed signs on the strength
of China's economy.
To rein in steep inflation, central banks have aggressively raised
interest rates but those hikes have largely come to an end as
policymakers look instead to cushioning the blow on their economies.
In the 20-member euro zone, Hamburg Commercial Bank's final
manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global,
was firmly below the 50 mark dividing contraction from expansion in a
broadbased downturn.
Still, it did rise to 44.2 in November from October's 43.1, above a 43.8
preliminary estimate. An index measuring output, which feeds into a
composite PMI due on Tuesday seen as a barometer of economic health,
climbed to 44.6 from 43.1.
"It's not great but we have seen an upward revision which is a good sign
- it is a harbinger of less bad times to come. For the euro zone the
worst will be over early next year," said Holger Schmieding at Berenberg.
But while sub-indices perked up a bit last month, HCOB cautioned that
the uptick was timid and that it was too early to call it an upward
trend.
In Germany, Europe's largest economy, its PMI was stubbornly sub-50
although it did show signs of improvement while in France factories
again suffered from weak demand.
In Britain, outside the European Union, there were further signs that it
might be turning a corner in a long-running downturn but companies
remained cautious.
ASIAN PAIN
China's private Caixin/S&P Global manufacturing PMI unexpectedly rose to
50.7 in November from a 49.5 reading in October, surpassing analysts'
forecasts.
The reading came a day after an official survey showed a contraction in
both manufacturers' and non-manufacturers' activity, underscoring
deepening troubles in the world's second largest economy.
"The domestic market cannot make up for losses in Europe and the United
States. The data shows that factories are producing less and hiring
fewer people," Dan Wang, chief economist at Hang Seng Bank China, said
of China's PMI readings, which have different samples.
[to top of second column] |
An employee works on a production line manufacturing steel
structures at a factory in Huzhou, Zhejiang province, China May 17,
2020. Picture taken May 17, 2020. China Daily via REUTERS/File Photo
Export-reliant Japan, South Korea and Taiwan bore the brunt of
sluggish global demand with their manufacturing activity remaining
stagnant in November, surveys showed.
"It's hard to expect a recovery in Asia any time soon," said Toru
Nishihama, chief emerging market economist at Dai-ichi Life Research
Institute. "While exports probably hit bottom, they won't accelerate
much from here as the global economy lacks a key driver of growth."
Japan's final au Jibun Bank manufacturing PMI fell to 48.3 in
November from 48.7, shrinking at the fastest pace in nine months.
South Korea's PMI stood at 50.0 in November, rising slightly from
October's 49.8. The factory gauge rebound came after 16 straight
months of contraction through October, the longest downturn since
the survey began in April 2004.
Manufacturing activity also shrank in Taiwan, Vietnam and Malaysia,
but expanded in India, Indonesia and the Philippines, the surveys
showed.
China's economy has struggled this year to mount a strong
post-pandemic recovery, adding gloom to an already darkening global
outlook as U.S. and European economies begin to feel the pinch from
past aggressive interest rate hikes.
"The weakness in China's service sector is particularly worrying, as
it shows demand is evaporating even as supply picks up," Dai-ichi
Life Research Institute's Nishihama said.
In India, the PMI survey showed the country's manufacturing growth
accelerated in November on robust output and new orders.
While domestic demand appeared strong, international demand took a
hit, with new export orders at a five-month low.
(Reporting by Leika Kihara; Editing by Jamie Freed and Gareth Jones)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|