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By Jonathan Cable and Leika Kihara
LONDON/TOKYO (Reuters) – Global factory activity fell in August as Russia’s war in Ukraine and COVID-19 restrictions in China continued to hurt businesses, polls showed on Thursday, with signs that pressures on charges were beginning to ease.
Manufacturing activity is weak in countries ranging from Germany to Britain to China, a sign that weak demand added to the headaches of corporations already suffering from persistent source restrictions.
Meanwhile, major central banks are expected to continue their competitive interest rate hikes, reducing optimism amid growing fears of a general collapse.
“We expect a recession in the eurozone and one in the United States next year. It remains to be seen whether this will turn into a global recession,” said Peter Schaffrik of the Royal Bank of Canada.
However, there has been some relief for factories suffering from sky-high costs, as weaker demand has the side effect of easing price pressures. Input prices fell in China and Taiwan for the first time since May 2020, and increases have slowed elsewhere.
South Korean brands recorded input costs in August at the slowest speed in 19 months, and the average input costs faced by Taiwanese product brands fell for the first time since May 2020.
In the euro area, the intermediate consumption value index remained well above its long-term average, but fell to its lowest point since early last year.
However, production activity in the financial union fell for a moment in August, while weak convening prevented factories from promoting as much as they manufactured and built inventories of finished goods at a record pace. [EUR/PMIM]
The latest S Euro Zone Manufacturing Purchasing Managers’ Index (PMI)
In Britain, outside the European Union, output and new orders have fallen to the highest in more than two years as uncertainty about rising inflation and the threat of a domestic recession deepens. [Go/PMIM]
China’s private manufacturing PMI in Caixin for the first time in 3 months in August, as weak demand, power shortages, and new COVID-19 outbreaks disrupted production.
The strangely weak reading echoes china’s official PMI released on Wednesday, which is also below the 50-point mark.
“The fight against the pandemic in China and geopolitical tensions with the United States continue to disrupt the chains. Rising inflation is also affecting domestic demand across Asia,” said Toru Nishihama, lead economist at Tokyo’s Dai-ichi Life Research Institute.
“Fears of a recession in the United States don’t either. The economies of the United States and China are engines of global growth, so when they fail, they create disruption for businesses. “
Export powers also reported weaknesses. Japan’s factory activity grew at its slowest rate in nearly a year in August, while South Korea’s fell at the fastest rate in two years, the PMI for both countries showed.
In Germany, Europe’s largest economy and main exporter, the productive sector for a month now.
Manufacturing activity deteriorated sharply in Taiwan, with production and new orders falling at the fastest rate since the first wave of the pandemic in May 2020.
The final production PMI at Jibun Bank Japan fell to 51. 5 in August from 52. 1 last month, marking the slowest rate of expansion since September 2021.
South Korea’s PMI fell to 47. 6 in August from 49. 8 in July, remaining below the 50 threshold for a month and reaching its lowest point since July 2020.
India’s business activity continued to grow strongly in August, thanks in part to an increase in output due to declining input price inflation, the country’s PMI showed.
Southeast Asia remained a bright spot in the region with an acceleration in the expansion of production activity in Indonesia, the Philippines and Thailand, while Malaysia’s expansion slowed slightly, according to PMIs.
(Reporting through Jonathan Cable and Leika Kihara; Edited through Sam Holmes and Hugh Lawson)