Global Manufacturing Growth Shudders Towards A Halt
Sunday, June 03, 2012
This months manufacturing PMI data only confirm what several months of prior surveys (and now the latest US jobs report) have been telling us, namely that growth in the developed economies is getting scarcer and scarcer, and harder and harder to come by. Following a brief brief period of stabilisation, which lasted roughly from November last year to this January, conditions have been steadily deteriorating in manufacturing sectors across the planet, with the deterioration being lead by an ongoing decline in new export orders. Roped in together through the various trade channels, the worlds industrial base is now, even in the best of cases, barely ekeing out growth, as can be seen in the fact that the JP Morgan global index registered a mere 50.6 in May, only marginally above the 50 no change level.
As the Global report puts it, the main drag on global industry remains Europe, where the Eurozone and UK PMIs fell to three-year lows. PMIs for Germany, France, Italy, Spain, the Netherlands and Greece all signalled contractions. Ireland saw a modest expansion, while Austria edged closer to stagnation. But beyond this activity in Eastern Europe weakened, as it did in Asia and the Americas.
New business continued to contract, with the rate of contraction especially marked, according to the report, in the case of export orders. Manufacturers in Europe, China and Japan all reported reduced levels of new export business, while growth in new exports slowed sharply in the US.
With the world nervously waiting to see how the Greek election process pans out, and where the Spanish government will find the money to recapitalise the country’s banks, the slowdown in China is turning out to be a wild card, which simply punds negative feedback into an already difficult situation.