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Falling orders stall factory activity worldwide

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Falling orders stall factory activity worldwide
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Euro zone manufacturing activity contracted for the first time in almost two years in August.

That confirms a global trend of faltering factory output as orders fade away.

Surveys of business purchasing managers (PMI) showed the slowdown is spreading with German factories, which have supported growth in the region, easing production and French manufacturing slipping.

Britain’s manufacturing sector shrank at its fastest pace in over two years, hurt by a sharp drop in demand for exports.

It was the same story in South Korea and Taiwan where new export orders fell sharply.

And although China’s official PMI increased slightly, its first rise since March, it also showed the effects of slowing demand in Europe and the US.

HSBC’s PMI figure for China, which relies more heavily on private companies than the large state-owned enterprises that dominate the government’s PMI report, showed factory activity contracted for a second consecutive month.

Responding to the numbers , analyst Jeavon Lolay at Lloyds Banking Group said: “The key thing they show is that we are not out of the woods. The economies are very vulnerable to any shock which at this moment in time there are a few of.”

“What is happening in the euro zone is very important and in the US growth has weakened markedly in the last two quarters. There is a risk of a return to recession,” Lolay added.