Agencies
Manufacturing activity in Europe witnessed a setback last month, but Asian factories enjoyed solid momentum, giving policymakers some hope the region can weather the hit from soft Chinese demand, surveys showed on Monday.
The downturn in Europe was widespread, with Italy the only big player not to see a fall in its Purchasing Managers’ Index (PMI) despite manufacturers largely cutting prices.HCOB’s final eurozone manufacturing PMI, compiled by S&P Global, fell to 45.8 in June from 47.3 in May. It has been below the 50 mark, separating growth from contraction for two years.
“What looks like the green shoots of recovery seem to be diminishing. We can’t take a recovery for granted,” said George Moran at Nomura.Germany’s factory sector, which accounts for about a fifth of Europe’s biggest economy, experienced a retreat, while in France, the manufacturing recession deepened.
France’s far-right National Rally (RN) party scored a historic win in parliamentary elections on Sunday, stoking risks of a crisis in the euro area even as other political parties rushed to build a united front to block its path to power.
In Britain, which holds a national election on Thursday, manufacturing growth slipped in June from May’s 22-month high as ongoing disruption to shipping in the Red Sea led to lower demand from overseas customers.
A eurozone index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good gauge of economic health, sank from May’s 49.3 to a six-month low of 46.1, albeit just ahead of the 46.0 flash estimate.A new orders index in the currency union dropped to 44.4 from 47.3, despite factories cutting prices charged for a 14th month.
But cost pressures weighed on manufacturers in countries like Japan, where a weak yen is boosting the price companies pay for fuel and raw material imports.
China’s Caixin/S&P Global manufacturing PMI rose to 51.8 in June from 51.7. This was the fastest increase in over three years and exceeded market forecasts of 51.2.
The private-sector reading followed official PMI data on Sunday, showing China’s manufacturing activity fell for a second month in June and services activity slid to a five-month low.
