Since the beginning of this year, the pace of recovery of the manufacturing industry in different regions of the world has been different, gradually showing a trend of differentiation. Emerging markets and developing economies, including China, have shown remarkable resilience in their manufacturing sector in the face of complex and severe conditions. Europe's manufacturing industry once showed signs of accelerating recovery, but the growth momentum is insufficient; Manufacturing data in the United States has rebounded, but economic growth remains difficult under the condition of high interest rates. Since the beginning of this year, the global manufacturing industry has recovered, which has a positive impact on boosting global economic growth expectations. However, under the influence of factors such as declining growth momentum and high inflation, the recovery rhythm of the manufacturing industry in different regions is different, and it gradually shows a differentiated trend. Overall, the global manufacturing sector is showing some signs of emerging from a weak run. According to a research report released by the China Federation of Logistics and Purchasing in early February, the global manufacturing purchasing managers' index (PMI) in January 2024 was 49.3%, up 1.3 percentage points from the previous month, getting rid of the trend of running below 49% for 9 consecutive months, and creating a new high since March 2023. Some analysts pointed out that the inflationary pressure in 2024 is expected to ease compared with the past few years, and the expectation that the European and American central banks will cut interest rates within the year is gradually heating up, which is conducive to the recovery of the global manufacturing industry and also contributes to the benign recovery of the national economy. However, the recovery in manufacturing varies by region.
Emerging markets and developing economies, including China, have shown remarkable resilience in the development of their manufacturing industries in the face of complex and severe situations. Asia's manufacturing PMI rose above 50 per cent again in January, according to the China Federation of Logistics and Purchasing. Among them, China's manufacturing PMI in January rose 0.2 percentage points from the previous month, indicating a recovery in economic prosperity. Among ASEAN countries, except the Philippines, the manufacturing PMI of other major countries increased to varying degrees compared with the previous month; In Latin America, the manufacturing PMI of Brazil and Mexico increased significantly compared with the previous month. Although the manufacturing industry in Africa has declined, the index level is still around 49% for two consecutive months, and many countries in the region have implemented a series of economic reforms to promote diversified development and improve economic resilience, and the economy has maintained a stable recovery. Europe's manufacturing sector once showed signs of accelerating recovery, but the growth momentum is insufficient. According to S&P global data, the eurozone manufacturing PMI in January was higher than market expectations, hitting a new high in nearly 10 months, but the relevant data fell sharply in February. Not only that, Germany, one of the engines of the eurozone economy, also saw its manufacturing PMI fall sharply after six consecutive months of recovery. German heavy industry has recorded zero or negative growth for a fourth consecutive quarter, putting pressure on the eurozone as a whole. Some analysts pointed out that although the European Central Bank still insists on not cutting interest rates, high interest rates are increasingly curbing the eurozone economy, especially the manufacturing industry. High interest rates continue to push up borrowing and production costs for companies, and the Ukraine crisis has pushed up energy costs, forcing manufacturers to curtail investment, investment and consumption are depressed. Many manufacturing companies in Europe have been forced to shut down or relocate production lines, hampering economic recovery.
On February 15, the European Commission released its winter economic forecast report, reducing the growth rate of the EU economy in 2024 from 1.3% to 0.9%, and the growth rate of the eurozone economy from 1.2% to 0.8%. The Bundesbank has since warned that Germany's economy could shrink slightly in the first quarter of this year, slipping into a technical recession, as external demand is weak, consumers remain cautious and domestic investment is constrained by high borrowing costs. Although the U.S. manufacturing index has rebounded, there are still many people who are pessimistic about the prospects of the U.S. economy. S&p Global released data on February 22 that the Markit manufacturing PMI index in the United States in February further rebounded from January. Analysts point out that it is still difficult for the U.S. economy to grow under the condition of high interest rates. Wells Fargo Bank released a report that believes that as the U.S. job market eases and layoffs begin to increase, consumer spending may slow in 2024, and the U.S. economy is expected to cool sharply in the coming months. A poll by the American Public Opinion Institute's Public Affairs Research Center (AP-NORC) at the end of January found that only 35 percent of American adults surveyed thought the U.S. economy was in good shape, while 65 percent still thought it was in poor shape. It should also be seen that since the beginning of this year, central banks in Europe and the United States have continued to release signals to "beat" the market and suppress expectations of rapid interest rate cuts. This reflects the concern of central banks in Europe and the United States about the risks of cutting interest rates too quickly, especially the core inflation data in Europe and the United States has shown a stronger viscosity than expected, which cannot but put them on alert. Still, keeping rates high won't be easy. At present, the European and American banking industry has recently warned frequently, the US government's interest expenses have also been rising, and the curb of high interest rates on the manufacturing industry is gradually prominent. For Europe, in particular, the biggest risk is to follow the US in policy and allow the impact of high interest rates to continue to ferment.
