Factories across world are hit by weak demand

Julian Harris
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MANUFACTURING sectors are in decline throughout Europe, while factories in emerging markets are also being hit by the weaker demand from the global economy.

A range of purchasing managers’ indices (PMI) released by Markit yesterday showed that manufacturing is still contracting in the vast majority of surveyed nations.

Across the Eurozone, manufacturing sank to a reading of 45.1 in August – slightly worse than the earlier estimate of 45.3.

Scores below the no-change 50 mark indicate economic contraction.

Ireland was the only surveyed state in the single currency area to record factory sector growth – and even this was at the weak rate of 50.9.

Even the Eurozone’s supposed power-house, Germany, recorded another negative score (44.7).

And European countries outside of the euro area are also faring badly, with the Czech Republic (48.7) and Poland (48.3) both struggling.

While Russia’s manufacturers reported growth – with a PMI score of 51 – other emerging economies, known as BRICS, were not as positive.

China’s vast factory sector has been badly hit by slowing new orders, two complementary surveys showed, in a worrying sign for the world’s second-largest economy.

The final reading of the HSBC China PMI for August fell to a seasonally adjusted 47.6, its lowest level since March 2009, down from 49.3 in July.

It followed China’s official factory PMI, which fell to a lower-than-expected 49.2 in August, the National Bureau of Statistics said on Saturday.

Factory growth was recorded in nearby India, yet even there the index score edged down to 52.8 – the lowest pace of expansion for the year.

And India’s economy will grow by only 5.1 per cent in the current fiscal year, Morgan Stanley predicted yesterday – knocking 0.7 percentage points off its previous forecast.

Back in the UK, meanwhile, PMI lifted from 45.2 to 49.5 inā€ˆAugust, an easing in factory sector contraction.