U.S. Manufacturing Activity Slumps to Lowest Level in Three Years
U.S. manufacturing activity dropped to its lowest level since May 2020, as the Institute for Supply Management (ISM) reported a manufacturing PMI of 46.3 in March, down from 47.7 in February. This is the fifth consecutive month with a PMI below 50, signaling a contraction in the manufacturing sector.
Rising Borrowing Costs and Financial Sector Stress Impact Demand
Increased borrowing costs due to the Federal Reserve's fight against high inflation have reduced demand for goods. Furthermore, the recent failure of two U.S. regional banks and the takeover of Credit Suisse have added stress to the financial sector, potentially affecting demand further.
Mixed Manufacturing Performance in Euro Zone
Factories in the eurozone also experienced a decline in March, with S&P Global's final euro zone manufacturing PMI falling to 47.3. However, an output index rose to a 10-month high of 50.4, and input prices fell for the first time since July 2020.
Weak Demand Affects German, French, and British Manufacturing
German manufacturing activity shrank rapidly in almost three years, while France's factory sector remained weak due to low demand. British manufacturers slipped but displayed increased optimism for the future.
Asian Economies Face Manufacturing Challenges
In March, Japan, South Korea, and China faced contracting or stalling manufacturing activity. Weak chip demand and slowing global growth threaten Asian economies reliant on exports.
India Shines Amid Regional Manufacturing Struggles
India's manufacturing sector expanded quickly in three months, suggesting that its economy may be better positioned to handle the global slowdown. Meanwhile, factory activity in Vietnam and Malaysia shrank, and the Philippines experienced slower growth than in February.
