The recovery in international manufacturing has slowed


According to data released by the China Federation of Logistics and Purchasing, the global manufacturing purchasing managers’ index (PMI) was 54.7 percent in January, down 0.6 percentage points from the previous month and down for the second consecutive month.From the perspective of changes in the global manufacturing PMI, the index remained above 54%, higher than the 50% line between expansion and contraction, continuing the previous recovery trend.However, it is still down from an average of 56.1 percent in 2021.That suggests the global manufacturing recovery is losing momentum.By region, the performance of major countries and regions in the world is not good or bad, but Europe, the United States and Asia are strong.The final Markit manufacturing PMI for the eurozone in January was 58.7 per cent, a five-month high.Eurozone manufacturing showed an acceleration in expansion as supply chain bottlenecks eased further, with companies reporting the biggest improvement in production and order books for four months in January.However, the improvement was mixed across the eurozone, with countries such as Germany and Austria performing well and countries such as Italy and Spain slowing down.Asian countries continued their previous strong growth.Japan’s PMI expanded for the 12th straight month in January to 55.4%, the highest since February 2014.South Korea also expanded for a third consecutive month, with its PMI rising 0.9 percentage points to 52.8 per cent in January.Asean PMI remained unchanged from the previous reading and remained at a high level.Businesses are optimistic about future prospects.In the US, the ISM manufacturing PMI in January was 57.6%, down for the second consecutive month and hitting a 14-month low.Separately, declines in production and new orders were the main drag on the decline.Thus, the impact of the surge in COVID-19 cases caused by the omicron mutant strain on companies cannot be underestimated.The US was also the main drag on the decline in the global PMI.For some time now, supply chain crises, rising raw material prices and labor shortages caused by COVID-19 have been key factors constraining the recovery of manufacturing in major countries.The ongoing outbreak, especially the recent attack of the omicron mutant strain, has put renewed pressure on the global supply chain, which had been easing. The shutdown and infection caused by the outbreak have also disrupted production and raw material supply.Despite the adverse impact of the rebound of the epidemic, the global supply chain continues to recover from the trough in terms of country-by-country data and the level of optimism of enterprises. The pressure on raw material prices has eased, and enterprises remain confident about future demand and supply chain improvement.The real concerns are rising inflationary pressures and the direction of monetary and fiscal policy in the developed world.Us inflation rose 7.5% in January from a year earlier, staying above 7% for the second month in a row.Eurozone inflation also rose to a record 5.1 per cent in January.Due to geopolitical and other factors, international oil prices have risen for seven consecutive weeks, hitting a new high in more than seven years, further exacerbating inflationary pressure in various countries.Some countries have already started to curb inflation by raising interest rates and other policies. For example, on February 3, the Bank of England announced to raise interest rates by 25 basis points to 0.5%, and at the same time started a plan to shrink the balance sheet passively and sell corporate bonds.Whether the Fed will give forward guidance on the path of interest rate hikes and balance sheet tightening at its March meeting is also highly focused.Amid high inflation, the tightening of monetary and fiscal policies will restrain the pace of global economic recovery to some extent, thus affecting the momentum of manufacturing recovery.Overall, although the global manufacturing PMI index fell for two consecutive months, the momentum of recovery before is still sustained, and the overall trend is still good.In the face of uncertainties such as repeated epidemics and inflation, countries should accelerate the transformation of their manufacturing sector, reduce the impact of external factors on the manufacturing sector through digitization and technological upgrading, and stabilize supply chains through deeper cooperation to inject momentum into global economic recovery.(Economic Daily By Yu Yang)

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