World factories stuck in low gear on sluggish demand

Wed Jun 1, 2016 11:36am EDT
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By Jonathan Cable and Elias Glenn

LONDON/BEIJING/NEW YORK (Reuters) - Global manufacturing activity remained stuck in a rut last month with factory output from Asia, Europe and the Americas barely improving as producers struggled to bring in new orders, surveys released on Wednesday showed.

Speculation in recent weeks that the U.S. Federal Reserve will raise interest rates in the next few months, concerns about Chinese economic growth, and worries that a possible British exit from the European Union, are all factors that have knocked confidence.

"The world economy will meander along at its slowest pace since the financial crisis for a second year in a row in 2016 as it is ensnared in a "low-growth trap", the OECD said on Wednesday, urging governments to boost spending.

Global manufacturing growth stalled last month as new orders barely accelerated, forcing factories to run down backlogs and cut back on staffing levels, a survey showed on Wednesday.

JPMorgan's Global Manufacturing Purchasing Managers' Index (PMI), produced with Markit, came in at 50.0 last month, right on the level that separates growth from contraction, compared to 50.1 in April.

"The May PMI data suggest that the global manufacturing sector remains in a low gear. Indices for output, new orders and the headline PMI were all at, or barely above, the stagnation mark," David Hensley, a director at JPMorgan said.


A factory is seen in Incheon, South Korea, May 30, 2016.  REUTERS/Kim Hong-Ji