Asian factories lose momentum in May, Europe stays buoyant
LONDON/NEW DELHI: Factories across much of Asia ran into a soft patch in May as export demand slowed but those in Europe enjoyed buoyant growth amid signs of steady improvement in the global economy.
Analysts said the weakness in Asia was likely to be temporary and the findings from private business surveys came a day after Moody’s Investors Service painted an upbeat picture of global growth.
Further indications the euro zone’s economy is enjoying a stable and broad-based recovery, alongside inflationary pressures, will be welcomed by policymakers at the European Central Bank.
And giving a boost to Prime Minister Theresa May a week before a national election, British manufacturing chalked up its second-fastest growth in nearly three years last month, putting the sector on track to shrug off Brexit-related uncertainty and improve on a weak first-quarter performance.
IHS Markit’s Manufacturing Purchasing Managers’ Index for the euro zone rose to 57.0 in May, up from April’s 56.7 and its highest level since April 2011. A reading above 50 indicates growth.
Germany, Europe’s largest economy, led the charge, but IHS Markit said solid upturns were recorded in other countries as well. France lagged behind but is still enjoying its best quarter for six years.
As the bloc’s economic performance improves, the ECB will sound a little more optimistic at its June 8 meeting, possibly raising its risks assessment to balanced or discussing removing its bias to ease policy, a Reuters poll of economists showed.
Across the Channel, Britain’s factory PMI slipped to 56.7 from a three-year high in April. But aside from the previous month’s PMI, that was its strongest reading since June 2014.
“Overall, after the sharp slowdown in GDP growth in 1Q, this survey suggests that the manufacturing sector will play its part in an acceleration in growth in 2Q,” said Scott Bowman at Capital Economics. — Reuters