BENGALURU/ SYDNEY: Global factories had a weak finish to 2023, with euro zone activity contracting for an 18th straight month in December and Asia’s manufacturing powerhouses taking a hit due to China’s patchy economic recovery.
A range of factory purchasing managers’ indexes published on Tuesday showed a persistent slowdown and suggested any turnaround this year would take time, challenging the renewed optimism in financial markets over the past few weeks.
HCOB’s final euro zone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, nudged up marginally to 44.4 in December from 44.2 in November but remained well below the 50 level that marks growth in activity.
The trend points to a contraction in euro zone GDP in the quarter just gone by, with manufacturing activity in the 20-country bloc’s largest economy, Germany, also shrinking in December.
The euro zone economy contracted 0.1% in the third quarter, according to official data, so a second quarter of shrinkage would meet the technical definition of recession.
“Euro zone manufacturing remained under pressure at the end of 2023,” said Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics. “Looking ahead, the slight increase in optimism regarding the year-ahead outlook is a silver lining, but a slim one.” An index measuring euro zone factory output, which feeds into a composite PMI due on Thursday and seen as a good gauge of economic health, dipped to 44.4 from November’s final reading of 44.6 but was slightly ahead of the 44.1 flash estimate.
Britain’s manufacturing sector also suffered a setback, with the final reading of the S&P Global/CIPS manufacturing PMI weakened to 46.2 in December, ending a run of three months of improvement.
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