London:
Factory activity in Asia, Europe and the US ended 2024 soft as expectations rose for the new year amid heightened trade risks from Donald Trump’s second presidency and China’s weak economic recovery.
A manufacturing slowdown in the euro zone intensified last month, with little sign of recovery anytime soon as the bloc’s three largest economies – Germany, France and Italy – remain mired in an industrial recession. Manufacturing purchasing managers’ indexes from across Asia, published on Thursday, showed that factory activity in China and South Korea eased, although there were some signs of a pickup in Taiwan and Southeast Asia.
In the US, activity in the factory sector contracted for a sixth consecutive month to wrap up another year of lower output.
US President-elect Trump has promised across-the-board tariffs with major barriers to imports from three major trading partners – Mexico, Canada and China.
The Caixin/S&P Global Manufacturing PMI for China fell to 50.5 in December from 51.5 the previous month, pointing to analysts’ forecasts and activity showing only modest gains. Gabriel Ng, assistant economist at Capital Economics, said Beijing’s increased policy support in late 2024 provided a near-term boost to growth, which is likely to be reflected in other fourth-quarter indicators.
“And this improvement should continue until early 2025,” Ng said. “But the boost probably won’t last more than a few quarters, with Trump likely to act on his threat of tariffs before prolonged and persistent structural imbalances continue to weigh on the economy.”
In Europe, HCOB’s Eurozone Manufacturing Purchasing Managers’ Index, compiled by S&P Global, fell to 45.1 in December, just below an earlier estimate and below the 50-percent growth rate seen in 2022. It is from the middle. “Production in the eurozone remained under pressure in late 2024, held back by a continued decline in new orders both in the domestic market and exports,” noted Pantheon’s chief eurozone economist Claus Westesen.