Early signs of global slowdown resurface
June 1: Factory growth eased in Europe and Asia in May, surveys showed on Wednesday, feeding concerns that the world’s main economic engines are cooling fast as richer countries curtail orders.
Adding to the gloom, US private payroll growth slowed sharply in May, coming in far below expectations and falling to the lowest level in eight months. The report raised concerns about a broader reading of US payrolls figures due on Friday and pushed down the US dollar and stock futures.
Purchasing managers indexes (PMI), measuring the activities of thousands of factories across the world, sank to multi-month lows in China and Europe, where even regional pacesetters France and Germany showed fresh signs of sagging. The surveys for South Korea, India and Taiwan also showed the pace of factory activity easing, while the US manufacturing sector slowed to its lowest level since 2009, completing the picture of global manufacturing surge that may be running out of stream.
The US factory activity fell to 53.5 in May from 60.4 the month before. The US data sent Wall Street lower, with the broad S&P 500 down more than one per cent. The euro hit a fresh four-week high against the greenback. Lacklustre growth and consumption in the US and Europe have also restrained demand. “I would be loathe to say there’s a sharp slowdown in the pipeline, but some momentum seems to be lost,” said Mr Mark Miller, global macroeconomist at Lloyds Bank Corporate Markets.
Higher interest rates have already had a marked effect on growth in emerging Asia, where investors are nervously watching for any evidence that the slowdown there is worsening as central bankers tighten credit conditions to combat inflation.
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