Overview of Global Manufacturing Slowdown
Major manufacturing economies worldwide struggled to regain momentum in October, according to business surveys released on Monday. The weak US demand and tariffs imposed by President Donald Trump have negatively affected factory orders.
US manufacturing plants have also been hit by import tariffs, causing new orders to slump and supply chains to tighten last month. This resulted in manufacturing activity contracting for the eighth consecutive month.
Challenges Faced by Manufacturers
Some manufacturers complained about the “unpredictability of the tariff situation” causing “uncertainty over future prices or costs,” and mentioned that “tariff-related issues on production equipment needed for domestic production make it difficult to justify capacity expansion.”
Eurozone manufacturing activity slowed due to stagnant new orders and falling staff numbers, according to the purchasing managers’ index (PMI). Germany, a key export powerhouse in the region, showed little signs of recovery, with production growth slowing once again.
Regional Performance
German engineering orders plummeted in September, reported the VDMA association on Monday. The manufacturing sectors in France remained weak while Italy saw a slight contraction. Among the four major economies in the bloc, Spain stood out with its factories expanding at a faster pace than in September.
“The final manufacturing PMI release for the eurozone confirmed that the sector remains stagnant,” said Paolo Grignani of Oxford Economics. “Growth is primarily driven by solid domestic demand, while signals from foreign orders remain alarming, with reports of weak demand in France and the US.”
UK Manufacturing Performance
Outside the European Union, UK factories had their strongest month in a year, but the recovery was driven by a one-off bounce from Jaguar Land Rover’s production restart following a cyberattack.
Despite some progress in trade negotiations with major manufacturing economies like China and South Korea during Trump’s recent Asia visit, exporters remain cautious about US demand.
Manufacturing activity in China slowed down more in October, while it fell in South Korea, with both countries experiencing a decrease in export orders, according to private sector PMI data for October.
Chinese Manufacturing Sector
The official PMI survey on Friday showed that factory activity fell for the seventh consecutive month in October, confirming suspicions that the previous export boom to beat US tariffs had come to an end.
“The PMI suggests that China’s economy lost some momentum in October, with slower growth in manufacturing and construction sectors,” said Zichun Huang, China economist at Capital Economics.
“Some of this weakness may reverse in the short term, but any export boost from the latest US-China trade deal is likely to be modest and broader headwinds will persist for growth.”
Key Questions and Answers
- Q: Who are the major manufacturing economies affected by US tariffs? A: Major manufacturing economies worldwide, including the US, Eurozone countries like Germany, France, and Italy, as well as Spain and the UK, have experienced a slowdown due to weak US demand and Trump’s tariffs.
- Q: How have US manufacturing plants been impacted by tariffs? A: US manufacturing plants have faced challenges such as slumping new orders, tightened supply chains, and increased uncertainty regarding future prices or costs due to tariffs.
- Q: What is the current state of manufacturing activity in key economies? A: Manufacturing activity remains stagnant in the eurozone, with Germany showing little signs of recovery. China’s manufacturing growth slowed in October, while South Korea experienced a decline.
