Global factory activity weakened in March as consumers feeling the pinch from rising living costs cut back, surveys showed on Monday, suggesting a deteriorating outlook will remain a drag on economic recoveries and keep policymakers on their toes.
Although factories across the euro zone saw a further decline last month, the cost of manufacturing fell for the first time since mid-2020.
S&P Global's final euro zone manufacturing Purchasing Managers' Index (PMI) fell to 47.3 in March from February's 48.5, just ahead of a preliminary reading of 47.1 but below the 50 mark separating growth from contraction for a ninth month.
An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, did however rise to a 10-month high of 50.4 from 50.1.
"Today's PMI results highlight that challenges remain for manufacturing companies. Although consumer demand has largely held across sectors, this could lessen gradually," said Thomas Rinn, global industrial lead at Accenture.
German manufacturing activity shrank in March at the fastest pace in almost three years, while weak demand continued to drag down France's factory sector as purchasing managers turned pessimistic about the 12-month outlook for their businesses.
In Britain, outside the European Union, manufacturers also slipped, but did turn more optimistic about the future as cost pressures and supply chain problems eased.
The improving supply chains and lower energy costs meant input prices fell in the euro zone for the first time since July 2020 - just when the COVID-19 pandemic was cementing its grip.
But oil prices surged on Monday, posting the biggest daily rise in nearly a year, after a surprise announcement by OPEC+ on Sunday to cut more production, likely adding to inflationary pressures.
Export-reliant Japan and South Korea both saw manufacturing activity contract in March while growth in China stalled, highlighting the challenge facing Asia as authorities try to keep inflation in check and fend off headwinds from slackening global economic momentum.
"With global growth set to remain weak in the coming quarters, we expect manufacturing output in Asia to remain under pressure," said Shivaan Tandon, emerging Asia economist at Capital Economics.
China's Caixin/S&P Global manufacturing PMI stood at 50.0 in March, much lower than market forecasts of 51.7 and below February's 51.6.
The reading echoed slower growth in an official PMI released on Friday.
"The foundation for economic recovery is not yet solid. Looking forward, economic growth will still rely on a boost in domestic demand, especially an improvement in household consumption," Wang Zhe, senior economist at Caixin Insight Group, said on China's PMI.
South Korea's PMI fell to 47.6 in March from 48.5 in February, its weakest in six months as export orders took a hit.
Japan's final au Jibun Bank PMI stood at 49.2 in March, up from February's 47.7 but remaining below the 50-threshold, as new orders contracted for a ninth-consecutive month.
A separate central bank survey released on Monday showed Japanese big manufacturers' sentiment soured in January-March to its worst in more than two years, as weak external demand added to the struggle for firms already grappling with rising raw material costs.
India was a rare bright spot in the region, with its manufacturing sector expanding at its quickest pace in three months in March on improved output and new orders, suggesting its economy is better placed than most of its peers to weather a global slowdown.
Vietnam and Malaysia saw factory activity shrink in March, while that of the Philippines expanded at a slower pace than in February, surveys showed.
While supply disruptions caused by the pandemic have mostly run their course, weak chip demand and fresh signs of slowdown in global growth have emerged as risks to many Asian economies.
The collapse last month of two U.S. banks and the take-over of Credit Suisse have added to uncertainty over the global outlook by causing market turbulence and shedding light on potential vulnerabilities in the world financial system.
While indications are that the U.S. Federal Reserve will pause its tightening cycle soon, the outlook remains clouded by the banking-sector troubles, still-high inflation and slowing global growth. (Reuters)
China was strongly dissatisfied with Japan's export restrictions on chip manufacturing equipment, Chinese foreign ministry spokesperson Mao Ning said on Monday.
China hoped Japan would act on its statements of cooperation with China and take an objective stance, Mao told reporters at a regular briefing.
Japan said on Friday it would restrict exports of 23 types of semiconductor manufacturing equipment, aligning its technology trade controls with a U.S. push to curb China's ability to make advanced chips. (Reuters)
Malaysian Prime Minister Anwar Ibrahim on Monday said he was prepared to negotiate with China over a maritime dispute between the two countries, days after a think tank reported Chinese patrolling close to a Malaysian offshore gas project.
China claims sovereignty over almost the entire South China Sea, through which about $3 trillion worth of ship-borne trade passes annually. Malaysia, Brunei, the Philippines, Taiwan and Vietnam have some overlapping claims.
The issue was raised between Anwar and Chinese President Xi Jinping in China last week as Malaysia has energy exploration projects in the area, Anwar said at an address on Monday at the prime minister's department.
Anwar did not specify which dispute or which area of the South China Sea.
"In that area there is a similar claim from China. I said (to them) that as a small country that needs oil and gas resources, we have to continue. But if the condition is that there must be negotiation, then we are ready to negotiate," Anwar said, without elaborating.
China claims about 90% of the South China Sea via a U-shaped "nine-dash line" on its maps that cuts through the exclusive economic zones (EEZ) of five Southeast Asian countries.
That line was declared invalid as part of an international arbitration ruling in 2016, which Beijing does not recognise.
Malaysian state oil company Petronas operates oil and gas fields in the South China Sea within Malaysia's EEZ and has in recent years had several encounters with Chinese vessels.
Those include a month-long standoff between a Chinese survey ship and an oil exploration vessel contracted by Petronas in 2020, which China had said was conducting normal activities.
The U.S. think tank, the Asia Maritime Transparency Initiative (AMTI), in a report last week said a Chinese coast guard vessel was for the past month operating near Petronas' Kasawari gas development off Malaysia's Sarawak state, and came as close as 1.5 miles of the project. A Malaysian navy ship was in the area at the same time, AMTI said.
The vessel, CCG 5901, the world's largest coast guard vessel, was last active in Indonesia's Tuna Bloc gas field and Vietnam's Chim Sao oil and gas field, AMTI said.
The Kasawari field holds an estimated 3 trillion cubic feet of gas reserves and is expected to start production this year.
Malaysia's navy did not immediately respond to a request for comment and Petronas declined to comment.
China foreign ministry spokesperson Mao Ning on Monday said they were not aware of the specific incident but said the coast guard operated within China's jurisdiction and its conduct was beyond reproach. (Reuters)
The former principal of an Australian ultra-Orthodox Jewish School, Malka Leifer, was found guilty of sexually abusing two former students by a Melbourne court on Monday, local media reported.
Leifer, who also holds Israeli citizenship, was extradited to Australia from Israel in 2021 after fleeing the country in 2008 when the accusations surfaced.
After a six-week trial, a jury found 56-year-old Leifer guilty of 18 sexual offences including rape, indecent assault and penetration of a child aged 16 or 17, according to state broadcaster Australian Broadcasting Company (ABC). The jury cleared her of nine other charges, ABC reported.
The former principal of Adass Israel School pleaded not guilty to all charges.
The County Court of Victoria, where the trial was held, and a lawyer for Leifer did not immediately respond to Reuters' requests for comment.
Three sisters, Nicole Meyer, Dassi Erlich and Elly Sapper, accused Leifer of sexually abusing them between 2003 and 2007, when they were teenagers. The court found Leifer guilty of offences against Erlich and Sapper but not Meyer.
“She abused the three of us for so many years and while today’s verdict may not properly reflect that, today Malka Leifer was finally held accountable," said Sapper outside the court on Monday.
"She is guilty and she will be held accountable. Justice was served today.”
Between 2014 and her extradition in 2021, Leifer fought her return to Australia, including with a submission of mental illness. An Israeli court in 2020 found Leifer was "faking" mental disability and was fit to stand trial.
The three sisters alleged the offences took place on school grounds, in locked staff offices, on school camps and at Leifer's home, reported the ABC.
Sentencing will follow. (Reuters)