Worries over future US tariffs are clouding the outlook for factories across much of Asia and Europe, according to surveys released yesterday which nonetheless showed some were able to shrug off the uncertainty and keep growing.
Among the bright spots, Japan’s manufacturing data showed growth for the first time in 13 months, South Korea’s activity contracted at a milder pace and China’s Caixin purchasing managers’ index (PMI) also expanded last month — confounding an official survey that showed activity shrinking for a third straight month.
In Europe, Ireland, Spain and the Netherlands were among the star performers, even as the wider eurozone data was broadly flat and the UK continued to contract, albeit more slowly.
Photo: Reuters
Analysts said the underlying softness in surveys highlights the challenges facing businesses and policymakers as they try to navigate US President Donald Trump’s moves to shake up the global trade order with sweeping tariffs.
The Caixin/S&P Global survey showed that the Chinese manufacturing PMI rose to 50.4, surpassing expectations in a Reuters poll.
Japan’s final au Jibun Bank PMI rose to 50.1 due to an upswing in output, but overall demand remained weak as new orders shrank on concerns over US tariffs.
Factory activity in South Korea contracted for the fifth straight month, although the pace of decline eased on relief over a snap presidential election on June 3 that ended six months of uncertainty.
In manufacturing, India was a significant outlier in the region last month, as activity accelerated to a 14-month high, driven by a substantial rise in international sales that helped spark a record-breaking spurt in hiring.
Negotiators from major US trading partners are rushing to reach deals with Trump’s administration by a Wednesday next week deadline to avoid import tariffs jumping to higher levels.
While China is continuing its negotiations for a broader trade deal with the US, Japan and South Korea have so far failed to win concessions on the tariffs imposed on their mainstay export items such as automobiles.
The 27-member EU is embarking on new talks in Washington later this week.
The eurozone HCOB manufacturing PMI, compiled by S&P Global, edged up to 49.5 last month from 49.4 in May, its highest level since August 2022, but still below the 50 mark denoting growth in activity.
Moreover, national surveys revealed stark differences across the EU. Ireland recorded the highest PMI at a 37-month peak of 53.7, while Greece, Spain and the Netherlands also posted readings above 50.
While Germany’s manufacturing PMI reached its highest in nearly three years, it still indicated contraction. France, Italy and Austria on the other hand registered faster declines in manufacturing conditions.
In the UK, the manufacturing sector showed some signs of turning a corner in its long slump.
“That said, any hoped for stabilization remains fragile, and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects,” S&P Global Market Intelligence director Rob Dobson said.
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