Global manufacturing struggles with shrinking demand

Good evening,

The current flow of purchasing manager indices from S&P Global and others highlights the struggles of manufacturers as they face dwindling demand and an impending economic downturn.

In the eurozone, activity contracted in all major economies in July, according to S&P Global. Rising inflation hit demand, pushing the bloc’s average PMI score to 49.8 in 25 months, up from 52.1 the month before — 50 marks the gap between growing and contracting activity.

Italy, the eurozone’s second largest manufacturing hub after Germany, underperformed, with a score of 48.5 and the largest drop in orders since the peak of the pandemic in April 2020.

Chris Williamson, chief business economist at S&P Global, said euro-zone manufacturing “sank into an increasingly steep decline, adding to recession risks in the region”.

In the UK, manufacturing activity fell to 52.1, the lowest level since June 2020. Rob Dobson of S&P Global said the sector was hit by “increasing market uncertainty, the cost of living crisis, war in Ukraine, supply difficulties and inflationary pressures. simultaneously hit demand for goods, while lingering post-Brexit issues and the obscuring global economic backdrop hamper exports.”

In the US, the S&P Global Lecture fell to 52.2 from 52.7 in June, the lowest level in two years, as production and new orders declined amid dwindling demand, supply chain problems and rising inflation. A separate PMI value of the Institute of Supply Managementa measure closely watched by investors showed growth fell from 53 to 52.8. ISM also indicated that cost pressures could ease.

In China, S&P’s PMI reading showed activity is still recovering from recent Covid outbreaks, but at a slower pace, falling to 50.4 from 51.7 in June. Separate official PMI data over the weekend showed that factory activity is contracting unexpectedly.

In Japan, the S&P Global PMI reached a 10-month low of 52.1 from 52.7 in June, as production and new orders dwindled, although companies, unlike China, continued to add staff.

India proved to be a notable exception, recording a jump to 56.4 from 53.9 in June, as new business and production rose while inflationary pressures eased.

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Need to know: the economy

The first shipment of Ukrainian grain in months left the port of Odessa today after weeks of negotiations between Kiev and Moscow. The Razoni, which carries 26,000 tons of maize, will arrive in Istanbul tomorrow. The first €500 million of up to €9 billion in EU financial aid arrived in Ukraine today and another €500 million will be shipped on Tuesday.

Latest for UK and Europe

The UK launched its new property register to curb the flows of “dirty money” into the country – an amount estimated to be £100 billion a year. Anonymous foreign owners or buyers of real estate will no longer be able to hide behind secret shell companies when they try to hide their illicit wealth.

German retail sales fell by much more than expected 8.8 percent in real terms in June compared to last year, marking the biggest drop in nearly 30 years as consumers tightened their belts. Sales fell by 1.6 percent between May and June.

France mobilizes businesses, households and government agencies to drastically cut energy consumption in anticipation of potential gas losses from Russia. The UK also has an energy security problem, writes energy editor David Sheppard, but the country won’t admit it.

The boom in tourism is one of the few bright spots in the eurozone as the outlook for the bloc’s broader economy wanes.

One industry benefiting from the rise in the cost of living is the UK pawn shop sector, as borrowers increasingly seek small loans backed by assets such as jewelry and watches. This market has also been boosted by a crackdown on high-yield lenders.

Worldwide last

Awaiting legislation on U.S. Semiconductor ManufacturingDesigned to reverse the decline in US market share from 38 percent in 1990 to just 10 percent today, Intel has described it as “the most important piece of industrial policy” in America since World War II. The $280 billion Chips and Science Act is a major economic victory for President Joe Biden, columnist Rana Foroohar agrees.

Emerging Markets have been hit by a record series of pullbacks in foreign investment over the past five months, while fears of a recession and rising interest rates have rattled emerging economies such as Sri Lanka, Bangladesh and Pakistan.

India China could overtake China as the world’s largest buyer of minerals in the next 10 years, according to a prominent industrial investor, as China’s debt burden and demographic challenges become “incredibly problematic.”

Hong-Kong has entered its second recession in three years as Beijing’s zero-covid strategy tarnishes the area’s status as an international financial center. Official data today showed the economy shrank 1.4 percent in the second quarter, after falling 3.9 percent in the first three months.

Japan grapples with the biggest coronavirus outbreak since the start of the pandemic, fueled by children and adolescents who have not been fully vaccinated.

Need to know: business

HSBC, Europe’s largest bank, has pledged to restore its dividend to pre-pandemic levels after surpassing estimates to achieve a $5 billion pre-tax profit in the second quarter. Lenders across Europe need to rethink as they face rising interest rates, inflation, new taxes and a global economic downturn, or as the UBS chief told the FT, “The world will have to relearn banking.”

UK companies will face an ‘iceberg’ next spring, with a £3bn jump business rates — the taxes they pay based on the rental value of the property they occupy. The annual increase, which is linked to inflation, has been scrapped for the past two years due to the pandemic.

Sudden shifts in consumer spending wreak havoc on US retailers stocks. Households not only have less to spend, but would rather spend their money on experiences they missed during the pandemic, such as traveling and dining out.

Dutch brewer Heineken reported rising sales and profits in the first half of the year as thirsty consumers returned to bars and shook off higher prices for their drinks. Revenues rose by 37 percent to 16.4 billion euros.

The rise of the bread industry became a symbol of how the UK economy has changed over the decades. But as our Big Read describes, it now faces an uphill battle for survival after being derailed by the pandemic, rising ingredient costs, the loss of cheap labor due to Brexit and changing consumer tastes. The wine industry The pandemic is also undergoing fundamental changes.

It’s impossible to predict what Covid’s lasting legacy will be in terms of work patterns, writes FT deputy editor Patrick Jenkins, but few bosses will argue that it will mean less time in headquarters buildings. Rising interest rates, remote working and the push for greener developments indicate bleak prospects for the commercial real estate market, he says. The FT editorial said public and private sector leaders needed to think more deeply about what the changes mean for the future of cities.

The world of work

Flexible and hybrid job offers are now expected by default by Gen Z staff, writes career expert Jonathan Black. But what else can companies do to attract and retain young workers who want an interview rather than a job interview and jobs with a broader purpose?

Those companies that do strive for better social behaviour not only provide better workplaces, but also a better return, says the Lex column.

A welcome change, says columnist Emma Jacobs, is the growing awareness of the difficulties women face menopause. All too often, it can just be a smokescreen for ageism, she writes. “All the desk fans, cool-down rooms and ambassadors are doing nothing to address the lack of career advancement – ​​or worse, discrimination – for women (or men for that matter) in their late 40s, 50s, and 60s.”

Hybrid and remote working policies are becoming more common, but some companies are taking location flexibility one step further, writes Isabel Berwick in the Working It newsletter. “Work everywhereIn fact, the policy encourages employees to travel and work abroad without having to show your face in a real office.

However, working remotely can mean a very different experience for those without the luxury of a dedicated office space. Toiling in a stifling heat wave, for example, will always be much more pleasant for those who can afford an airy house with shutters.

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What good news

The Lionesses of England took the crown in a Euro 2022 tournament that could be a turning point in the commercial advancement of women’s football. If you want to get a sense of last night’s euphoria – a rare occurrence in English football – check out this impromptu press conference invasion (BBC).