Euro zone manufacturing activity barely expanded at the end of 2018, providing disappointing reading for European Central Bank policy makers
\nNEWS DESK
\nLONDON\/HONG KONG
\nFactory activity weakened across much of Europe and Asia in December as the US-led trade war and a slowdown in demand hit production in many economies, offering little reason for optimism as the new year begins.
\nA series of purchasing managers\u2019 indexes for December released on Wednesday mostly showed declines or slowdowns in manufacturing activity across the globe.
\n\u201cWe are really seeing a global slowdown into this year, and in Asia, particularly, export-oriented countries are hurting,\u201d said Irene Cheung, Asia strategist at ANZ.
\n\u201cOur expectation for central banks is that most of them won\u2019t change policy in 2019 and these numbers coming out on the weak side won\u2019t change that outlook.\u201d Euro zone manufacturing activity barely expanded at the end of 2018, providing disappointing reading for European Central Bank policymakers, just after they ended their 2.6 trillion-euro asset-purchase scheme.
\nEarlier PMI surveys showed Italy remained in contraction territory and was joined by France, where data showed a first deterioration in operating conditions for 27 months.
\nManufacturing growth in both Germany and Spain was modest, easing to the weakest in around two-and-a-half years. British factories, however, ramped up stockpiling as they prepared for possible border delays when Britain leaves the European Union in less than three months\u2019 time. The UK manufacturing PMI rose to a six-month high, stronger than all forecasts in a Reuters poll of economists. [GB\/PMIM] Survey compiler IHS Markit cautioned the improvement did not herald a big change in the outlook for Britain\u2019s stuttering economy \u2014 it was caused in large part by manufacturers stockpiling inputs and finished goods.
\nCHINA BRAKES
\nIn China, the Caixin\/IHS Markit PMI slipped into contraction territory for the first time in 19 months, broadly tracking an official survey released on Monday. China\u2019s weakness spilled over to other Asian economies. Malaysian manufacturing slowed to its weakest pace of expansion since the survey began in 2012, and Taiwan fell to its lowest since September 2015.
\nMeanwhile, official economic data out of Singapore showed its gross domestic product grew more slowly than forecast in the fourth quarter as the city-state\u2019s manufacturing contracted on a quarterly basis.
\nWith growth slowing and inflation below or barely within target in most countries, Asian central banks are unlikely to continue their tightening cycle this year, barring any shocks in currency markets.
\nInteractive graphic on Asian central bank policy rates: tmsnrt.rs\/1U5hc2W
\nThe world\u2019s two largest economies agreed at the start of December to a 90-day truce following tit-for-tat tariffs that have disrupted the flow of hundreds of billions of dollars of goods between the two countries.
\nTariffs are not the only drag on China\u2019s economy. Beijing\u2019s sustained drive to reduce debt risks in the economy has cooled the property market and curbed credit flows to the private sector. Meanwhile, the government\u2019s intensified crackdown on pollution has dented industrial activity.<\/p>\n
In a key annual conference last month, China\u2019s top leaders said they would boost support for the economy in 2019 by cutting taxes and keeping liquidity ample, while promising to continue negotiations with Washington.<\/p>\n
China\u2019s economic growth slowed to 6.5 percent in the third quarter of last year, the weakest since the global financial crisis. Reuters reported government advisers had recommended a growth target of 6.0 to 6.5 percent for this year at the annual meeting, though the final figure won\u2019t be made public until parliament\u2019s annual meeting in early March.<\/p>\n
A drop in crude-oil prices LCOc1 at the end of last year has helped sentiment in Asia\u2019s oil-importing economies, where trade deficits are a key vulnerability.<\/p>\n
Indonesia\u2019s PMI, although still weak historically, rose. India\u2019s declined but capped the strongest quarter for the country\u2019s manufacturing since late 2012. But Malaysia, which relies heavily on oil revenues, saw its weakest reading ever.<\/p>\n
Taiwan and South Korea, which are heavily focused on tech production, also saw activity shrink. The U.S.-China trade war affects chip orders and coincides with a slowdown in demand for smart phones globally.<\/p>\n","protected":false},"excerpt":{"rendered":"
Euro zone manufacturing activity barely expanded at the end of 2018, providing disappointing reading for European Central Bank policy makers NEWS DESK LONDON\/HONG KONG Factory activity weakened across much of Europe and Asia in December as the US-led trade war and a slowdown in demand hit production in many economies, offering little reason for optimism […]<\/p>\n","protected":false},"author":2,"featured_media":43618,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-43607","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n