Concern over Trump weakens manufacturing sector around the world

Factory activity in Asia, Europe and the United States ended 2024 on a low note, as expectations for the new year deteriorated due to the growing trade risk of a second Donald Trump presidency and China’s fragile economic recovery.

The future president of the United States has promised to impose tariffs across the board, with greater barriers to imports from three major trading partners: Mexico, Canada and China.

Weak Chinese demand drags down Asian activity

Asia-wide manufacturing purchasing managers’ indices released yesterday showed a slowdown in activity in China and South Korea, although signs of recovery were seen in Taiwan and Southeast Asia.

China’s Caixin/S&P Global manufacturing PMI fell from 51.5 in November to 50.5 in December, indicating modest growth in activity.

This improvement should last until early 2025. But the boost probably won’t last more than a few quarters, with Trump likely making good on his tariff threat before long and persistent structural imbalances still weighing on the economy.said Gabriel Ng, associate economist at Capital Economics.

Europe suffered a sharp decline

The slowdown in the euro zone’s manufacturing sector intensified last month, with few signs of a quick recovery, as the bloc’s three largest economies – Germany, France and Italy – remain mired in an industrial recession.

The HCOB Eurozone Manufacturing Purchasing Managers’ Index, compiled by S&P Global, fell to 45.1 in December, even further away from the 50 mark separating growth from contraction, where it has been since mid-2022.

Last month, German factory activity sank further into contraction territory, with sharp declines in output and new orders, while activity in France fell at the fastest rate in more than four years.

In Washington it contracted for the sixth consecutive month

In the United States, activity contracted in December for the sixth consecutive month, capping another year of lackluster production across the manufacturing sector.

The S&P Global Manufacturing Purchasing Managers’ Index fell from 49.7 in November to 49.4 points in December. The Institute for Supply Management will release another report today on the US manufacturing sector, which is also expected to show some sluggishness.

US factories have had a difficult end to the year and reduced their optimism about growth to 2025said Chris Williamson, chief economist at S&P Global Market Intelligence.

Factories report a moderate sales environment and inquiries, especially in terms of exports.