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China's private PMI stalls in March - survey
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South Korea, Japan saw factory activity shrink in March
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Surveys highlight fragile nature of Asia's recovery
(Adds European data, comment)
By Jonathan Cable and Leika Kihara
LONDON/TOKYO, April 3 (Reuters) - Global factory
activity weakened in March as consumers feeling the pinch from
rising living costs cut back, surveys showed on Monday,
suggesting a deteriorating outlook will remain a drag on
economic recoveries and keep policymakers on their toes.
Although factories across the euro zone saw a further
decline last month, the cost of manufacturing fell for the first
time since mid-2020.
S&P Global's final euro zone manufacturing Purchasing
Managers' Index (PMI) fell to 47.3 in March from February's
48.5, just ahead of a preliminary reading of 47.1 but below the
50 mark separating growth from contraction for a ninth month.
An index measuring output, which feeds into a composite PMI
due on Wednesday that is seen as a good guide to economic
health, did however rise to a 10-month high of 50.4 from 50.1.
"Today's PMI results highlight that challenges remain for
manufacturing companies. Although consumer demand has largely
held across sectors, this could lessen gradually," said Thomas
Rinn, global industrial lead at Accenture.
German manufacturing activity shrank in March at the fastest
pace in almost three years, while weak demand continued to drag
down France's factory sector as purchasing managers turned
pessimistic about the 12-month outlook for their businesses.
In Britain, outside the European Union, manufacturers also
slipped, but did turn more optimistic about the future as cost
pressures and supply chain problems eased.
The improving supply chains and lower energy costs meant
input prices fell in the euro zone for the first time since July
2020 - just when the COVID-19 pandemic was cementing its grip.
But oil prices surged on Monday, posting the biggest daily
rise in nearly a year, after a surprise announcement by OPEC+ on
Sunday to cut more production, likely adding to inflationary
pressures.
ASIAN STRAIN
Export-reliant Japan and South Korea both saw manufacturing
activity contract in March while growth in China stalled,
highlighting the challenge facing Asia as authorities try to
keep inflation in check and fend off headwinds from slackening
global economic momentum.
"With global growth set to remain weak in the coming
quarters, we expect manufacturing output in Asia to remain under
pressure," said Shivaan Tandon, emerging Asia economist at
Capital Economics.
China's Caixin/S&P Global manufacturing PMI stood at 50.0 in
March, much lower than market forecasts of 51.7 and below
February's 51.6.
The reading echoed slower growth in an official PMI released
on Friday.
"The foundation for economic recovery is not yet solid.
Looking forward, economic growth will still rely on a boost in
domestic demand, especially an improvement in household
consumption," Wang Zhe, senior economist at Caixin Insight
Group, said on China's PMI.
South Korea's PMI fell to 47.6 in March from 48.5 in
February, its weakest in six months as export orders took a hit.
Japan's final au Jibun Bank PMI stood at 49.2 in March, up
from February's 47.7 but remaining below the 50-threshold, as
new orders contracted for a ninth-consecutive month.
A separate central bank survey released on Monday showed
Japanese big manufacturers' sentiment soured in January-March to
its worst in more than two years, as weak external demand added
to the struggle for firms already grappling with rising raw
material costs.
India was a rare bright spot in the region, with its
manufacturing sector expanding at its quickest pace in three
months in March on improved output and new orders, suggesting
its economy is better placed than most of its peers to weather a
global slowdown.
Vietnam and Malaysia saw factory activity shrink in March, while that of the Philippines expanded at a slower pace than in February, surveys showed. While supply disruptions caused by the pandemic have mostly run their course, weak chip demand and fresh signs of slowdown in global growth have emerged as risks to many Asian economies. The collapse last month of two U.S. banks and the take-over of Credit Suisse have added to uncertainty over the global outlook by causing market turbulence and shedding light on potential vulnerabilities in the world financial system.
While indications are that the U.S. Federal Reserve will
pause its tightening cycle soon, the outlook remains clouded by
the banking-sector troubles, still-high inflation and slowing
global growth.
(Reporting by Jonathan Cable and Leika Kihara; Editing by Shri
Navaratnam and Sharon Singleton)
