The global manufacturing slump deepened in June, with data from round the world illustrating the extent to which the US-China trade conflict is weighing on growth. A global manufacturing index produced by JPMorgan and IHS Markit fell to its lowest level since 2012 in June, with new orders weakening sharply and business optimism at the lowest level on record. Its monthly reading of 49.4, down from 49.8 in May, indicated a majority of firms reported falling output.
Global markets had rallied on Monday after Donald Trump met Chinese president Xi Jinping at the G20 summit, softening his stance on dealing with China’s technology giant Huawei and reaching an agreement to resume trade talks. But economic data gave a sobering reminder of the damage done by the prolonged stand-off between the world’s two largest economies, and by the recent escalation in trade tensions.
A series of other data releases on Monday captured the dismal performance from manufacturers round the world. In China, manufacturing suffered a relapse after three months of growth, with the Caixin-Markit purchasing managers’ index slipping below 50. Eleanor Olcott, economist at the consultancy TS Lombard, said falls in new orders in both this survey and in official data suggested China’s domestic economy was slowing, in addition to the impact of tariffs on the country’s exports.