- Confidence indicators in the region have plummeted and the eurozone future output PMI plunged to its lowest reading since May 2020.
- China’s factory activity slumped at the fastest pace in two years in March, a private sector PMI showed, as the fallout from the Ukraine crisis and resurgence in domestic coronavirus cases hit external and domestic demand.
- South Korea’s PMI fell to 51.2 in March from 53.8, the lowest in four months, and Japan’s final au Jibun Bank PMI rose to 54.1, up from 52.7.
According to surveys released on Friday, global factory activity slowed in March as Russia’s invasion of Ukraine tightened supply chain bottlenecks, reduced demand, and shook confidence while skyrocketing energy costs drove a broader price increase as reported by Reuters.
Uncertainty
The uncertainty caused by the invasion, combined with an intensifying cost-of-living crisis, suggests the euro zone’s manufacturing industry could slide into a recession this quarter.
“Today’s figures show the worsening supply chain situation is having a major impact on the industry, with rates of both input costs and selling price inflation currently far above anything previously seen,” said Thomas Rinn, global industrial lead at Accenture.
S&P Global’s final manufacturing Purchasing Managers’ Index (PMI) for the eurozone fell to a 14-month low of 56.5 in March from February’s 58.2, below an initial “flash” estimate of 57.0 but still well above the 50 mark that separates growth from contraction.
Price pressures
German manufacturers reported slower growth and far more pessimistic expectations for factory activity, and French manufacturing growth eased a bit more than forecast.
Confidence indicators in the region have plummeted and the eurozone future output PMI plunged to its lowest reading since May 2020.
In Britain, outside the common currency area, industry expanded at the weakest pace in 13 months and price pressures, which had previously shown some signs of moderating, worsened.
Asia strain
Asian factories saw activity slow as slumping Chinese demand and rising raw material costs strained firms, and although Japan benefited from easing COVID-19 infections the spike in fuel and grain costs clouded the outlook for economies reliant on energy imports.
China’s factory activity slumped at the fastest pace in two years in March, a private sector PMI showed, as the fallout from the Ukraine crisis and resurgence in domestic coronavirus cases hit external and domestic demand.
Slowdown in China
The slowdown in China bodes ill for Asia, which is host to big manufacturers dependent on consumption in the world’s second-largest economy, analysts say.
“The main channel for transmission is going to be from commodity prices, so energy, oil, gas, as well as foodstuff,” said Tai Hui, chief Asia market strategist at J.P. Morgan Asset Management.
“What’s going to happen is that the manufacturers, especially some of the more downstream ones, they’re going to face a bit more cost pressure,” he said.
South Korea’s PMI fell to 51.2 in March from 53.8, the lowest in four months, and Japan’s final au Jibun Bank PMI rose to 54.1, up from 52.7.
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Source: Reuters
