Global factories sluggish in July due to weakening demand

China drops to its lowest PMI in 9 months.

Manufacturing performance was lacklustre in Asia, the US, and Europe last month as factories struggled with weak demand.

In Asia, manufacturing activity in Japan and South Korea slowed due to soft domestic demand and rising input costs.

China's PMI dropped to 49.8 in July from the previous month's 51.8—its lowest level since October, impacting smaller, export-oriented firms.

Meanwhile, the US manufacturing Purchasing Managers' Index (PMI) plunged to 46.8 last month, the lowest level in eight months amidst a slump in new orders. The eurozone also experienced a downturn. Despite these challenges, British factories saw improvement with their best month in two years.

Looking ahead

Global economic growth is expected to remain below trend, affecting manufacturing activity across Asia.

Japan and South Korea showed different trends in PMI data with Japan falling to 49.1 in July from last month's 50.0, whilst South Korea remained above the 50-mark for a third month registering a PMI at 51.4 in July. However, it slowed from June's 26-month high of 52.0.

China remains a possible challenge for the region's business expansion. Even though South Korea's July exports increased at the quickest pace in six months, buoyed by strong chip sales, they missed market expectations.

Taiwan's factory activity grew in Taiwan but also slipped a bit from June while India's manufacturing activity expanded at a solid pace owing to sustained robust demand. China's decline in manufacturing activity poses a potential challenge for business expansion in the region. Taiwan and India saw mixed results in their manufacturing sectors in July.