Global factories struggle for growth

GLOBAL factories struggled to claw their way out of decline in February, with European powerhouse Germany squeezed by a steeper fall in demand.

A raft of business surveys released on Friday (Mar 1) highlighted a patchy performance in Europe as the first quarter drew to a close.

Across the eurozone, manufacturing activity continued to contract last month amid weak demand although firms were optimistic about the year ahead.

HCOB’s final euro zone factory PMI, compiled by S&P Global, dipped to 46.5 in February from January’s 46.6, beating a preliminary estimate of 46.1 but below the 50 mark separating growth in activity from contraction for a 20th month.

The cost of raw materials declined at a softer pace in the region, largely due to the price of commodities rather than disruption in the Red Sea, the PMI survey showed, although official data showed prices rose a tad more than expected in February.

Policymakers at the European Central Bank are widely expected to wait until June before cutting interest rates as they continue their battle to get inflation back to a 2 per cent target.

The manufacturing downturn in Europe’s largest economy, Germany, deepened in February as output and new orders declined at a faster rate. In Italy, the sector contracted for an 11th straight month, although it did show some signs of improvement, and the downturn in France eased.

Outperforming was Spain where factory activity expanded for the first time in almost a year as domestic demand picked up.

Britain, outside the European Union, marked a year of falling output although its PMI did rise.

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“Today’s UK PMI and eurozone figures show that recovery in the manufacturing sector remains slow,” said Boudewijn Driedonks at consultancy McKinsey &  Company.

“Across the eurozone, there is increasing divergence in manufacturing activity. This marks a stark difference to last year, when trends across countries were on a more similar trajectory.” REUTERS