Global factory activity weakened in September as sluggish demand and economic uncertainty created a challenging outlook, according to recent surveys, placing additional pressure on policymakers to bolster fragile economic growth.
In the eurozone, manufacturing activity declined at the fastest rate seen this year, despite factories reducing prices in response to falling demand. Germany, the region’s largest economy, experienced its steepest deterioration in manufacturing conditions in 12 months.
The HCOB final eurozone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 45.0 in September, signaling a significant contraction in the sector.
This was just ahead of a 44.8 preliminary estimate but further from the 50 mark separating growth from contraction.
“The euro zone rebound anticipated in early 2024 has turned out to be quite tepid. Confidence remains somewhat depressed and the manufacturing sector still looks very weak,” said Natasha May at JP Morgan Asset Management.
A drop in oil prices helped bring down input costs in the region but there are worries escalating Middle East tensions could impact output and drive them back up.
European Central Bank President Christine Lagarde dropped the clearest hint yet about another interest rate cut on Monday while Federal Reserve Chair Jerome Powell indicated the U.S. central bank would likely stick with quarter-percentage-point interest rate cuts moving forward and was not “in a hurry”.
U.S. stocks ended with modest gains on Monday, but enough for the Dow and S&P 500 to register record closing highs.
Inflation in the 20-country currency union fell to 1.8 per cent in September, below the ECB’s two per cent target and reinforcing an already solid case for another interest rate cut this month, official data showed on Tuesday.
In Britain, outside the European Union, factory managers turned sharply more pessimistic as worries about the new government’s first budget combined with concerns about the Middle East and strong inflation pressures
Source: Thewhistler & businessaffairs.com.ng
