The global manufacturing sector in Asia, Europe, and the United States ended 2024 on a low note, as growing uncertainties clouded expectations for the coming year. Concerns over a potential second term for Donald Trump as U.S. president and China‘s fragile economic recovery contributed to this downturn.
Manufacturing Struggles in the Eurozone
The Eurozone’s manufacturing sector experienced a significant slowdown in December, with no clear signs of a swift recovery. The region’s three largest economies—Germany, France, and Italy—continue to grapple with industrial recessions, impacting overall output. The HCOB Purchasing Managers’ Index (PMI) for the Eurozone fell to 45.1 in December. That signs sustained challenges for the region’s factories.
Weakening Activity in Asia
Across Asia, the slowdown in manufacturing was evident in China and South Korea. However, Taiwan and Southeast Asia showed some signs of recovery, offering a glimmer of hope. The Caixin/S&P Global PMI for China dropped to 50.5 in December, down from 51.5 the previous month. While this indicates modest growth, it fell below analysts’ expectations.
Impact of U.S. Trade Policies
In the United States, the manufacturing sector contracted for the sixth consecutive month. Concerns over trade policies under President-elect Donald Trump, who has promised to impose tariffs on imports from major trading partners like Mexico, Canada, and China, have added to the uncertainty. U.S. factories are facing a tough year-end, with lower optimism about growth prospects for 2025.
Challenges in the German, French and Asian Manufacturing Sectors
Germany‘s manufacturing sector saw further declines, with production and new orders continuing to shrink. Meanwhile, France‘s industrial activity dropped at the fastest pace in over four years, adding to the challenges facing the Eurozone.
While some regions, particularly Taiwan and Southeast Asia, exhibit signs of recovery, the overall manufacturing outlook remains bleak. As the U.S. and China continue to face trade tensions, and Europe deals with ongoing industrial stagnation, the global manufacturing sector faces a challenging start to 2025.
Economists like Gabriel Ng from Capital Economics suggest that the short-term support policies in China may offer temporary relief, but long-term challenges, including potential trade barriers from the U.S., will likely weigh on the global economy.
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