Global Factories Struggle For Momentum Amid Patchy Demand

• Sluggish global demand deepened the decline in manufacturing activity across Europe and remained a major challenge for many of Asia's big exporters, business surveys for May showed on Thursday.
• Purchasing managers' indices (PMIs) for the eurozone moved further below breakeven despite factories cutting prices for the first time since September 2020. In Britain, output fell for a third month in a row and new orders declined at the fastest pace in four.
• While PMIs from China and Japan showed swings in factory activity to growth last month, they stood in contrast to weak indicators from South Korea, Vietnam and Taiwan, where declines continued.
• "The weakness in demand in the manufacturing sector, which has become increasingly evident since the beginning of the year in falling PMI readings, has now led the surveyed companies to reduce their production for the second month in a row," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
• "The decline in new orders from home and abroad signals that the weakness in output is likely to persist for several more months." The decline was broad-based on activity falling in the currency union's four biggest economies - Germany, France, Italy and Spain. Factories cutting prices as the costs of production dropped at the fastest pace since February 2016 failed to stem a fall in demand.
• That price drop will likely be welcomed by policymakers at the European Central Bank who have failed so far to get inflation back to target despite embarking on their most aggressive policy-tightening programme in the Bank's history.

(Source: Reuters)