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Global Factory Activity Weakens

This article is published in collaboration with Statista

by Katharina Buchholz

Factory activity around the world is slowing, signaling a lagging economy that is curtailed by inflation and rising interest rates. Manufacturing powerhouses in Asia, like Taiwan and South Korea, saw some of the biggest declines - not a good sign given their status as bellwethers of global economic health.

In a range of manufacturing PMIs measured by IHS Markit, Caixin of China and Jibun Bank in Japan, all showed negative trends. China, which had been the first country where factory activity gained traction again after the initial Covid-19 outbreak in 2020, now showed one of the shakiest performances as the nation is sticking to its zero Covid policy and draconian lockdowns which can hamper factory activity. The Eurozone, on the other hand, produced one of the lowest readings at just 46.4 index points. Also reading below the 50-points mark - which signals contraction - were Taiwan, South Korea and China. The U.S. index also came dangerously close to a contraction at 50.4 points.

Japan, one of the worst performers when it came to PMI during 2020, had the highest reading of the bunch. The country's aversion to price increases and its companies' tendency to save up have proven advantageous in the current inflation crisis. As other countries are coming closer to recession, Japan is also affected, however. In August, GDP shrank on lack of exports to Europe and China.

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