Material shortages, supply disruption add to strains from pandemic
European factory growth slowed from peak in July
Japan, S. Korea factory activity grows, input prices up
China’s Caixin PMI fell sharply in July
LONDON/TOKYO, Aug 2 (Reuters) – Factories across the world are suffering from supply bottlenecks which sent prices skyrocketing in July, while a new wave of coronavirus infections in Asia demonstrated the fragile nature of the global recovery.
Business surveys on Monday highlighted the divergence in the global economy on the pace of recovery from the pandemic, which led the International Monetary Fund to downgrade this year’s growth forecast for emerging Asia. read more
Although manufacturers largely remained open throughout lockdowns, the loosening of some restrictions designed to limit infections has driven a flurry of demand – but factories are suffering from staff shortages and supply chain problems.
Euro zone and British manufacturing continued to expand at a blistering pace in July as the reopening of economies led to soaring demand, as it did in export powerhouses Japan and South Korea. However, growth in Chinese factory activity slippedsharply.
“The global economic recovery is still on track. The level of activity has been really strong but there have been delays in deliveries,” said Marchel Alexandrovich at Jefferies.
IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) for the euro zone dipped from June’s record high but was still firmly in growth territory.
The upbeat survey follows official data on Friday which showed the bloc’s economy grew faster than expected in the second quarter, pulling out of a recession caused by the COVID-19 pandemic as curbs to stop the virus were eased. read more
ASIA STRAIN
In China, however, demand contracted for the first time in over a year, a private survey showed. This broadly aligned with an official survey released on Saturday showing a slowdown in activity. read more
Smoke rises from a factory in front of Mount Fuji during the sunset at Keihin industrial zone in Kawasaki, Japan January 16, 2017. REUTERS/Toru Hanai/File Photo
Read More
“Supply bottlenecks remain a constraint. But the PMIs suggest demand is cooling too, taking the heat out of price gains and weighing on activity in industry and construction,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
Indonesia, Vietnam and Malaysia saw factory activity shrink in July due to a resurgence in infections and stricter COVID-19 restrictions, according to private surveys.
Once seen as a driver of global growth, Asia’s emerging economies are lagging their advanced peers in recovering from the pandemic’s pain as delays in vaccine rollouts hurt domestic demand and countries reliant on tourism.
“The risk is that growth scars linger for longer even if activity recovers in the coming months,” said Frederic Neumann, co-head of Asian Economics Research at HSBC.
“Plus, cooling export momentum, far from a temporary blip, provides a hint of what to expect in quarters to come,” he said, adding that such uncertainty over the outlook would prod Asian central banks to maintain loose monetary policy.
The final au Jibun Bank Japan PMI rose to 53.0 in July from 52.4 in the previous month, though manufacturers saw input prices rise at the fastest pace since 2008. read more
Japan also faces a surge in Delta variant cases that has forced the government to expand state of emergency curbs to wider areas through Aug. 31, casting a shadow over the Olympic Games and dashing hopes for a sharp rebound in July-September growth.
South Korea’s PMI held above breakeven for the 10th straight month. But a sub-index on input prices rose at the second highest on record. read more
While still grappling with infections, easing restrictions helped India’s factory activity to bounce back in July as demand surged both at home and abroad. read more
Reporting by Jonathan Cable and Leika Kihara; Editing by Toby Chopra
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/YEGVFNBR5ZIJTPY6BWUR4R2P2E.jpg)
