Global manufacturing industry is shrinking

Manufacturing has generally declined in June worldwide. According to data released by HSBC on July 2, most Asian economies, including China, saw further slowdown in manufacturing in June. Japan’s June Manufacturing Purchasing Managers’ Index (PMI) was 49.9, the lowest since November last year. South Korean manufacturing has also shrunk after several months of growth. Relevant data also showed that the manufacturing sector in the Eurozone continued to shrink in June, and there will be almost no recovery momentum in the second half of the year. The performance of the US manufacturing industry in June was also very poor, and it has shrunk for the first time in the past three years.

June PMI global general

In June, the South Korean PMI fell to 49.4 from 51.0 in May, and the manufacturing industry fell for the first time in five months. The decline in manufacturing in Vietnam is even greater. The HSBC Vietnam PMI fell to 46.6 in June from 48.3 in May. According to data released by Chinese officials on July 1, China's manufacturing PMI in June was 50.2, down 0.2 from last month. This is the second consecutive month that the index has fallen and hit a seven-month low. In the first half of this year, there were 1,727 new factories in Thailand, a decrease of 452 compared with the same period of last year, and the investment amount was also reduced by more than half compared with the same period of last year.

A PMI below 50 indicates a contraction in manufacturing. British market research firm Markit Economic Research announced on the 2nd that the euro zone's manufacturing PMI for June was 45.1, which was the same as that of May, the lowest since June 2009. Germany's PMI fell to 45 in June. According to data released by the Institute for Supply Management (ISM) on the 2nd, the PMI fell below 50 in June, falling to 49.7 from 53.5 in May. The sharp decline in new orders was the main reason. This is the first time in the United States that PMI has fallen below 50 since July 2009.

The European debt crisis cannot escape its responsibility

The global manufacturing industry has shrunk simultaneously, and the European debt crisis cannot escape its responsibility. Asia is the base of global manufacturing. It has always been called the “world factory”. The manufacturing industry in most Asian countries is more developed than the service industry. ASEAN and China, Japan and South Korea are manufacturing industries as the export pillars. Local economic growth. However, due to the impact of the European debt crisis, the world economy is weak. At present, Asian manufacturing industries are facing pressures such as reduced demand, rising raw materials and rising labor costs. The market demand for Asian manufacturing products has slowed significantly. Thai Industry Association President Parongsa said industrial products accounted for 35% of GDP. Although Thailand’s manufacturing industry began to recover after the floods, factors such as increased costs, labor shortages, domestic politics and the European debt crisis have all contributed to the Thai manufacturing industry. Great impact.

Some analysts believe that although the euro zone banking alliance is "inviting", it is exciting, but the cost of EU leaders due to improper handling of the crisis is rising. For the euro zone countries in the debt crisis, the continued implementation of fiscal austerity, the goal of reducing deficits, and the ability of banks to non-default and guarantee repayment are facing tremendous pressure. The global economic growth is getting weaker and the euro zone cannot expect to expand exports.

Nigel Galt, an economist at the US economic consultancy's global perspective, said in an analysis that the global economic slowdown has hit US manufacturing. ISM data shows that US manufacturing temporarily loses momentum, and domestic demand growth is not enough to offset the decline in demand from Europe and some emerging economies. He said that the US manufacturing industry is clearly affected by the global economic headwinds. However, the US construction industry is not yet in the recession, and the decline in oil prices is also helpful in promoting US consumption. He predicted that the overall output and employment situation of the US manufacturing industry will maintain a very moderate recovery.

Expand domestic demand and develop against the trend

Quan Dejian, an economic analyst at UOB in Singapore, told this reporter that the European debt crisis will not be satisfactorily resolved in the short term and will continue to affect the external demand of countries in the Asia-Pacific region. For example, countries such as Malaysia, Thailand, and Singapore are traditionally driven by external demand, and external demand is very important for these Asia-Pacific countries with high savings rates. Therefore, when the external demand of these countries drops significantly, their impact on the national economy is significant.

Quan Dejian said that the governments of the Asia-Pacific region should increase investment to drive some domestic demand. However, compared with European and American countries, the national income of Asia-Pacific countries is relatively low, and there is limited room for increasing internal demand. Therefore, the Asia-Pacific region needs to increase wages to drive consumption, that is, to reduce the gap between the rich and the poor to mobilize its own domestic demand.

India and Indonesia rely on their own countries to expand domestic demand and make their manufacturing industry go against the trend. According to HSBC's report, the Indian PMI rose to 55.0 in May from 54.8 in May, and the Indonesian PMI rose to 50.2 from 48.1 in May. HSBC economist Su Yulin analyzed that the strong PMI in Indonesia in June was mainly due to domestic demand offsetting the impact of external unfavorable factors on the economy. India's manufacturing activity grew strongly in June, mainly driven by new orders.

At the same time as the manufacturing slowdown, inflation in the Asian region has declined. Economists say this has allowed policymakers, especially in China and South Korea, to turn their attention to supporting economic growth, and Asian central banks may introduce more easing measures to boost economic growth. But to maintain the long-term prosperity of Asian manufacturing, it is necessary to transform the industry and achieve breakthroughs through innovations in technology, ideas and services.

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