Updated March 1st, 2024 at 17:22 IST

Global manufacturing grapples with declining demand

Eurozone factory PMI falls to 46.5 in February, marking 20th month of contraction.

Reported by: Business Desk
Manufacturing | Image:Pixabay
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Global manufacturing challenges: Global manufacturing faced challenges in February as factories worldwide struggled to overcome declining demand, particularly in China, while some regions showed signs of improvement.

Several business surveys released on Friday depicted a mixed picture of manufacturing performance across Europe and Asia as the first quarter came to a close.

In the eurozone, manufacturing activity continued to shrink due to weak demand, although there was optimism amongst firms about future prospects.

Eurozone factory PMI

The final eurozone factory Purchasing Managers' Index (PMI), compiled by S&P Global, dropped to 46.5 in February, slightly above the preliminary estimate but still below the 50-mark indicating growth, marking the 20th consecutive month of contraction.

Despite a slight decline in the cost of raw materials, attributed largely to commodity prices rather than Red Sea disruptions, a manufacturing downturn persisted in Germany and Italy, with France showing some signs of improvement, while Spain experienced growth.

Meanwhile, the UK, outside the EU, saw a year of declining output although its PMI rose slightly.

Eurozone recovery assessment

According to Boudewijn Driedonks from McKinsey & Company, the manufacturing sector's recovery remains sluggish across the eurozone, with increasing divergence in activity amongst countries compared to the previous year.

In China, official PMI data indicated a continued decline in factory activity, though the private-sector Caixin PMI showed a slight improvement.

Japan's manufacturing sector continued to deteriorate, with depressed domestic and international demand, complicating the Bank of Japan's efforts to exit ultra-easy monetary policy, following the country's unexpected slip into recession in the fourth quarter.

China's uncertain performance comes as the economy shows signs of tentative recovery from a property sector crisis-induced slump. Investors are closely watching China's upcoming annual parliamentary meeting for potential economic stimulus measures.

However, South Korea reported better-than-expected export growth in February, and India's manufacturing PMI indicated its fastest expansion in five months, following strong economic growth in late 2023.

In Southeast Asia, Vietnam, Indonesia, and the Philippines saw growth in manufacturing activity, but Malaysia and Thailand experienced continued declines.

(With Reuters Inputs)

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Published March 1st, 2024 at 17:21 IST