Global factory revival revs up

Demand for manufactured goods drove extended growth in factories across Europe and Asia in February, but a slowdown in China underscored the challenges countries face as they seek a sustainable recovery from the Covid-19 blow.

Restrictions imposed around the world to try and quell the spread of coronavirus have shuttered vast swathes of the services industry, meaning it has fallen to manufacturers to support economies. But vaccine rollouts and a pick-up in demand provided optimism for businesses that have grappled for months with a cashflow crunch and falling profits.

IHS Markit’s final Manufacturing Purchasing Managers’ Index jumped to a three-year high of 57.9 in February from January’s 54.8, beating the initial 57.7 “flash” estimate for one of the highest readings in the survey’s 20-year history.

German factory activity also reached a three-year peak last month and in France the pace of growth accelerated. Italy and Spain also saw a pick-up.

However, lockdown measures disrupted supply chains and factories struggled to obtain raw materials, leading to a big increase in delivery times.

Factories in Britain, outside the eurozone and the European Union, reported the slowest output growth since May last month. Disruptions and rising costs linked to Brexit and Covid-19 limited their ability to respond to a modest pick-up in orders.

Manufacturing activity in Japan expanded at the fastest pace in over two years and South Korea’s exports rose for a fourth straight month, suggesting Asia’s exportreliant economies were benefiting from robust global trade.

On the flip side, China’s factory activity grew at the slowest pace in nine months, hit by a domestic flare-up of Covid-19. —