(MENAFN- Khaleej Times) Factory activity shrank across much of Europe and Asia in June as the simmering US-China trade conflict put further strains on the manufacturing sector, keeping policymakers under pressure to deploy stronger steps to avert a global recession.
A series of mainly downbeat business surveys and official indicators released on Monday followed Saturday's warning by Group of 20 leaders who met in Osaka, Japan, of slowing global growth and intensifying geopolitical and trade tensions. The data was collected before the weekend summit.
The United States and China agreed at the summit to restart trade talks after US President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei, providing some relief to businesses and financial markets.
But analysts doubt the truce will lead to a sustained easing of tensions while lingering uncertainty could dampen corporate spending appetite and global growth.
"It's too early to turn optimistic. The two countries just kicked the can down the road and there's no knowing what could happen next," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo.
"Global manufacturing activity hasn't hit bottom yet. US business confidence, particularly that of manufacturers, has been weakening and if this continues, it may hurt economies across the world."
Factory activity in the eurozone shrank faster last month than previously thought, in a broad-based downturn, according to IHS Markit's Manufacturing Purchasing Managers' Index (PMI), which also suggested there would be no quick turnaround.
Germany's export-dependent manufacturing sector contracted in June for the sixth time in a row, Italian activity declined for a ninth month and Spain's contracted at its fastest rate in more than six years.
France, the eurozone's second-biggest economy, bucked the trend and activity grew at its fastest pace in nine months
British manufacturers suffered the sharpest fall in activity in more than six years, its PMI showed, adding to signs of economic weakness there.
"The global manufacturing sector has continued to deteriorate which will weigh on export orders," said Thomas Pugh at Capital Economics.
In China, Asia's economic engine, the Caixin/IHS Markit PMI came in at 49.4, falling short of market expectations and the worst reading since January.
It was the first time in four months the keenly-watched index has fallen below the neutral 50-mark dividing expansion from contraction on a monthly basis.
Japan also saw manufacturing activity contract in June to hit a three-month low, offering fresh evidence of an economy under the pump as global demand weakens.
Separately, a Bank of Japan (BoJ) survey showed big manufacturers' confidence hit a near three-year low, keeping its central bank under pressure to maintain or even ramp up a massive stimulus programme.
In South Korea, factory activity shrank at the fastest pace in four months in June as the global trade slowdown deepened, prompting companies to cut production.
Activity fell in Malaysia and Taiwan, a sign the US-China trade conflict's impact on the rest of Asia was broadening.
The US economy's manufacturing sector expanded in June but at a slower pace than the previous month and the slowest pace overall since October 2016, according to a report released on Monday. The Institute for Supply Management said its index of national factory activity fell to 51.7 from 52.1 the month before.
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