Concerns about future US tariffs are cloudying the prospects for factories in much of the United States, Asia and Europe, according to surveys published on Tuesday that, however, they showed that some managed to overcome uncertainty and continue growing.
Among the positive data, Japan’s manufacturing index showed growth for the first time in 13 months; The activity in South Korea contracted at a more moderate pace; And China’s PMI Caixin index also expanded in June, in contrast to an official survey that indicated contraction for the third consecutive month.
In Europe, Ireland, Spain and the Netherlands were among the countries with the best performance, although the general indicator of the euro zone was practically flat and the United Kingdom continued to contract, although slightly.
Analysts pointed out that the underlying weakness in the surveys highlights the challenges faced by companies and those responsible for economic policy when trying to adapt to the measures of the US President, Donald Trump, who seek to shake the global commercial order through radical tariffs.
“We must recognize that the external environment is still severe and complex, with growing uncertainty,” said Wang Zhe, economist from the Caixin Insight group.
The Global Caixin/S&P survey showed that China’s manufacturing PMI rose to 50.4, exceeding the expectations of a Reuters survey. The final PMI of the Jibun Bank of Japan increased to 50.1, driven by a production rise; However, the general demand remained weak due to the fall of new orders for concern for US tariffs.
The manufacturing activity in South Korea contracted for the fifth consecutive month, although the rhythm of descent was moderated after the relief generated by the early presidential elections of June 3, which ended six months of uncertainty.
In contrast, India was a significant exception in the region during the past month, since its manufacturing activity accelerated up to a maximum of 14 months, driven by a strong increase in international sales, which generated a hiring record.
That said, the manufacturing activity in the US contracted for the fourth consecutive month in June, the Management and Supplies Institute (ISM) reported, adding to the weak data of the real estate sector, consumer spending and the increase in unemployment.
These indicators suggest that the underlying impulse of the economy was further weakened in the second quarter, although GDP probably recovered as the ballast of a record commercial deficit vanished due to the fall in imports.
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The deadline
The negotiators of the main business partners of the US are rushed to reach agreements with the Trump administration before July 9, deadline to avoid an increase in import tariffs.
While China continues to negotiate a broader commercial agreement with the United States, Japan and South Korea have not achieved concessions on tariffs imposed on key products such as cars. The European Union, meanwhile, will begin new conversations in Washington at the end of this week.
The purchasing managers index (PMI) of the HCOB manufacturing sector of the euro zone, prepared by S&P Global, rose to 49.5 in June from 49.4 in May, its highest level since August 2022, although still below the 50 -year threshold, which separates the expansion of the contraction.
National surveys, however, revealed strong differences between block countries. Ireland registered the highest PMI, with a maximum of 37 months of 53.7, while Greece, Spain and the Netherlands also exceeded the 50th mark.
“It seems that we are at an optimal point, where domestic activity drives the index,” said John Fahey, a senior economist of AIB, about the Irish data.
He added that there may be a certain level of activity and investment that was postponed for two or three years, and that it is now inevitable, despite global uncertainty.
Although the manufacturing PMI of Germany reached its highest level in almost three years, it still indicated contraction. On the other hand, France, Italy and Austria showed more pronounced falls in their manufacturing sectors.
In the United Kingdom, outside the EU, the manufacturing sector showed recovery signs after a long crisis.
“That said, any stabilization expectation remains fragile and subject to possible winds against that they could seriously affect the demand, the reliability of supply chains and the perspectives of future growth,” said Rob Dobson, director of S&P Global Market Intelligence.
At the beginning of the Annual Central Banqueros Meeting in Sintra, Portugal, the president of the European Central Bank, Christine Lagarde, said that the global environment has changed fundamentally since the inflation outbreak derived from the pandemic:
“The world we have ahead is more uncertain, and that uncertainty will probably make inflation more volatile.”
Tuesday’s data showed that the Inflation of the euro zone was in the objective of 2% of the ECB in June, which suggests that the uncontrolled price period has come to an end.
In the United States, the ISM reported that its manufacturing PMI rose slightly to 49.0 in June from 48.5 in May, driven by a slight improvement in delivery deadlines. However, the index of new orders fell for the fifth consecutive month, employment in factories decreased and input prices increased slightly.
With Reuters information
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