Factory activity shrank in much of the world last month, private surveys showed on Wednesday, as signs of a slowdown in U.S. growth and the anticipated impact of President Donald Trump’s tariffs added to pressure from weak Chinese demand.
Euro zone manufacturing slipped back into contraction as new orders fell at their fastest rate in six months, with export markets acting as a particular drag, signalling that the recovery in the region’s industrial sector was fragile.
The HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 49.8 in September from August’s 50.7, which was the first reading above the 50.0-point line denoting growth since mid-2022.
“The drop in the PMI is showing up across the board, with respective figures for consumer goods, capital goods and intermediate goods all down on the month,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Surveys revealed a split across the currency union with the Netherlands leading the expansion with activity at a 38-month high while growth continued in Greece, Ireland and Spain. Meanwhile, the bloc’s three largest economies – Germany, France, opens new tab and Italy, opens new tab – all registered contractions.
In Britain, outside the European Union, activity shrank at the fastest pace in five months, reflecting subdued domestic demand and fewer export orders, painting a more downbeat picture than recent official data.
In Asia, the stress on manufacturers highlights the challenge policymakers face in protecting their export-reliant region from higher U.S. levies, a key policy of the Trump administration that has upended the global trade order and put the brakes on economic growth.
Export powerhouse Japan and global tech hub Taiwan saw manufacturing activity shrink in September, the surveys showed, leaving businesses in Asia – heavily dependent on the U.S. market – on a fragile footing.
Worryingly, China, a key engine of the global economy, also remained in the doldrums.
An official survey released on Monday showed manufacturing activity in the world’s second-biggest economy contracted for a sixth month in September, dragged down by weak consumption and the squeeze from U.S. tariffs.
