Factory activity slows worldwide in February despite price discounting

Tue Mar 1, 2016 11:32am EST
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By Jonathan Cable and Ian Chua

LONDON/SYDNEY (Reuters) - World manufacturing sector growth stagnated in February as falling prices failed to stimulate new orders, pushing factories to trim workforces, and dealing a blow to policymakers who are struggling to stimulate their economies.

Manufacturing output across much of Asia shrank in February while waning throughout Europe and remaining sluggish in the U.S., according to surveys of purchasing managers on Tuesday.

JPMorgan's Global Manufacturing Purchasing Managers' Index (PMI), produced with data vendor Markit, slipped to 50.0 last month, right on the level that separates growth from contraction, and down from 50.9 in January.

"Inflows of new business and production volumes barely rose, while the trend in international trade deteriorated," said David Hensley, a director at JPMorgan. "Market conditions will need to improve in the short run if global manufacturing is to avoid falling back into contraction."

The global PMI combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia.

"If you were looking for evidence of manufacturing growth stabilising then this isn't it. There were a couple of low spots that are quite surprising," said Philip Shaw at Investec.

"(But) to get a fuller picture of what is going on we will have to see evidence from the service sector." Monthly service industry surveys are due later this week.

Tuesday's downbeat data may sharpen the focus of officials from the world's leading economies who declared at a weekend G20 meeting they needed to look beyond ultra-low rates and printing money to reanimate growth.   Continued...

A worker fills molds with molten iron at an iron foundry in Bobruisk, southeast of Minsk, March 11, 2015. REUTERS/Vasily Fedosenko