Factory pain spreads through Asia, Europe; stimulus expected – by Jonathan Cable and Marius Zaharia (Reuters U.S. – August 1, 2019)

https://www.reuters.com/

LONDON/HONG KONG (Reuters) – Factory activity contracted across Asia and Europe in July, fuelling worries a prolonged U.S.-China trade war and an economic slowdown could tilt the world toward recession, which central banks would have to fight with depleted ammunition.

Manufacturing activity in the euro zone fell at its steepest rate since late 2012 last month as demand sank, a survey compiled by IHS Markit showed, puncturing sentiment among factory managers. [ECUR/PMIM]

Forward-looking indicators in Thursday’s survey suggest manufacturing won’t rebound anytime soon and is likely to embolden policymakers at the European Central Bank, who last week all but promised to ease policy further as the bloc’s growth outlook deteriorates.

Earlier figures from Germany, Europe’s largest economy, showed a recession among its manufacturers deepened. France and much of the rest of the euro zone also faltered.

“The manufacturing sector is going through some sort of correction, some of it due to trade uncertainty, some of it due to a slowdown in other countries,” said Jacqui Douglas, chief European macro strategist at TD Securities.

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