The manufacturing sector in the United States grew steadily in August, but activity in China and the euro zone fell as the war in Ukraine and the Covid-19 restrictions in China hurt companies, various manufacturing indices showed. which was released this Thursday.
Broad-based weakness in global manufacturing activity adds to signs of sluggish demand in many countries, compounding headaches for companies already suffering from persistent supply constraints.
No change in US
The Institute of Supply Management (ISM) Index reported that US factory activity was unchanged at 52.8 points last month, however it remains the lowest reading since June 2020, when the sector was trying to climb out of the induced depression. for the pandemic. A reading above 50 indicates expansion.
However, the new orders sub-index rebounded to 51.3 points in August from a reading of 48 in July, ending two straight monthly declines.
The manufacturing sector shows its resistance despite the fact that spending was redirected towards services and business confidence decreased due to the increase in interest rates.
We anticipate a recession in the euro zone and another in the United States next year. Whether this turns into a global recession remains to be seen,” said Peter Schaffrik, an economist at the Royal Bank of Canada.
Europe suffers contraction
Outside the United States, signs of tension deepened. Manufacturing activity across the euro zone contracted for the second month in a row as weak demand meant factories were unable to sell everything they made and stockpiled products.
The euro zone PMI index, compiled by S&P Global, fell to 49.6 points in August from 49.8 in July, falling back below the 50-point mark that separates growth from contraction on a monthly basis.
In the United Kingdom, factory production and new orders registered the biggest drop in more than two years (from 52.1 to 47.3 points) due to the uncertainty due to the increase in inflation and the risk of recession.
Asia, discouraging figures
China’s Caixin Manufacturing PMI is already below contraction, moving from 50.2 to 49.5 points.
Meanwhile, Au Jibun Bank’s Japan PMI fell to 51.5 points last month from 52.1 in July, marking the weakest growth rate since September 2021.
South Korea’s factory activity fell to 47.6 points from 49.8 in July, holding below 50 points for the second month and hitting its lowest point since July 2020.
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