Nation & World

American manufacturing improving while signs for global growth are less certain

Factories offer mixed omens

Gov. Kim Reynolds talks with employees during a tour at M and W Manufacturing in Cedar Rapids on Wednesday, Jan. 30, 2019. (Stephen Mally/The Gazette)
Gov. Kim Reynolds talks with employees during a tour at M and W Manufacturing in Cedar Rapids on Wednesday, Jan. 30, 2019. (Stephen Mally/The Gazette)

Stabilization of the global economy remained mixed at the start of 2019, with countries across Asia and Europe reporting further weakness in manufacturing as American factories showed signs of improvement.

Purchasing manager indexes from China to Australia, South Korea, the United Kingdom, Italy and Germany all declined in January. The Chinese number dropped to 48.3 from 49.7, moving further below the key 50 level that signifies expansion to its worst reading since 2016.

The Institute for Supply Management’s index for U.S. factories unexpectedly rose, however, to 56.6, rebounding after the steepest drop in a decade, data showed Friday.

While the U.S. measure points to improvement, many other places are experiencing declines or, as in the case of Brazil, only modest gains.

IHS Markit, which compiles the PMI gauges, also found further reasons for worry below the surface of the numbers, such as a sixth straight drop in South Korea export orders and a rough month in Japan for sales of goods relating to semiconductors.

“Given South Korea’s close trading ties with China and the U.S., falling export demand acts as a worrying indicator for global economic growth,” said Joe Hayes, an economist at IHS Markit.

It’s a shaky time for world commerce, with companies waiting to hear if the United States and China can find a resolution to their trade dispute and prevent an escalation of the tit-for-tat tariff battle of 2018.

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The International Monetary Fund cited trade as a major risk when it downgraded its forecast for the world economy in January.

The Federal Reserve responded to the shift in the global outlook by pausing its interest-rate hike cycle. China’s economy also is slowing, and a flood of companies from the world’s second-biggest economy have warned about profits.

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