Manufacturing activity in China slowed in July as the 5-month-long war in the Middle East delivered weaker demand and elevated costs for the exporting powerhouse. The conflict has almost halted shipping through the Strait of Hormuz, a key transit route for the Gulf’s energy exports, sending manufacturers’ energy prices soaring.
Global Impact
Factories in the world’s second-largest economy saw growth in new orders slow to its weakest pace since January, and although euro zone output surged, that was largely driven by firms clearing order backlogs rather than rising demand. The headline S&P Global Eurozone Manufacturing PMI rose to 51.9 in July from June’s 51.4, its highest reading since April but just below a preliminary estimate of 52.0.
Inflation in the common currency bloc rose to 2.9% in July from 2.8% a month earlier, official data showed last week, adding to an already strong case for another European Central Bank interest rate hike which would likely add a further constraint on demand as households curtail spending. Germany, Europe’s largest economy, enjoyed a strong start to the third quarter as manufacturing activity expanded but S&P Global said it was difficult to imagine this performance being sustained without a resolution to the Middle East conflict due to corresponding volatility in oil prices and uncertainty.
French factory activity slipped back into contraction and Italy’s manufacturing industry saw growth slow. In Britain, outside the European Union, manufacturing activity expanded for a ninth straight month in July but at the slowest pace in four months, according to its PMI that pointed to a renewed impact from the Iran war towards the end of last month.
Global Manufacturing Trends
Earlier PMIs showed India’s manufacturing sector expanded at its slowest pace in nearly five years as overall demand remained soft. But in contrast, Japan’s factory output expanded at its fastest pace in more than 12 years with across-the-board improvements in sub-indexes, including a 4-1/2-year high surge in new orders buoyed by AI-related demand.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
