Global manufacturing activity remained muted in May as factory output from Asia, Europe and the Americas struggled to gain momentum. However, the new orders failed to improve, with the Eurozone’s Markit final PMI dipping to three-month low amid sluggish Chinese growth.
Market speculation governing the raising of interest rate by the Federal Reserve in its meeting this month, concerns of sluggish growth in the Chinese economy and worries over the Brexit referendum have worked to pull down economic confidence to its lowest in recent times.
“The world economy will meander along at its slowest pace since the financial crisis for a second year in a row in 2016 as it is ensnared in a low-growth trap”, the OECD said on Wednesday, urging governments to boost spending.
Manufacturing barely accelerated, as new orders failed to improve amid weakness in overseas demand forcing factories to run down backlogs and cut back on staffing levels, a survey showed Wednesday.
Markit’s final manufacturing Purchasing Managers’ Index (PMI) for the euro zone dipped to a three-month low of 51.5 from April’s 51.7. Gross domestic product in the bloc grew 0.5 percent in the first quarter, but is expected to expand just 0.3 percent this quarter, according to a May Reuters poll.
Industry is expected to remain a huge dampener on growth in the second quarter of 2016, which will slow Eurozone’s gross domestic product. According to Bank of England, a vote to leave the European Union may also result in a recession for the British economy.
China’s economy grew by 6.7 percent in the first quarter, its slowest since 2009, while In Japan, factories grappling to recover from the earthquakes in the southern manufacturing hub of Kumamoto were also knocked by a contraction in external demand. The Markit/Nikkei Japan PMI showed the fastest contraction in three years.
The material has been provided by InstaForex Company – www.instaforex.com