U.S. factories have also been hit by import tariffs. New orders were depressed and supply chains strained last month, causing manufacturing activity to contract for the eighth straight month.
Some manufacturers complained that the “unpredictability of the tariff situation continues to wreak havoc and uncertainty about future prices or costs,” adding that “the problems posed by tariffs on production equipment needed for domestic production make it difficult to justify capacity expansion.”
Euro zone factory activity slowed due to stagnant new orders and a falling workforce, according to the Purchasing Managers’ Index (PMI), and its export powerhouse, Germany, showed few signs of recovery, with production growth slowing again.
German engineering orders plummeted in September, engineering association VDMA reported on Monday. The French manufacturing sector remained weak, while the Italian one contracted slightly. Spain stood out among the bloc’s big four economies as its factories expanded at a faster pace than in September.
“The final release of euro zone manufacturing PMIs confirmed that the sector remains stagnant,” said Paolo Grignani of Oxford Economics.
“Details indicate that the growth is mainly due to strong domestic demand, while new orders from abroad continue to send alarm bells, with reports of weak demand from France and the US.”
In Britain, outside the European Union, factories had their strongest month in a year, but the recovery was driven by a timely rebound from restarting production at carmaker Jaguar Land Rover after it was hit by a cyberattack.
Although Trump’s visit to Asia last week led to some progress in trade negotiations with the region’s large manufacturing economies, such as China and South Korea, exporters remain cautious about US demand.
Manufacturing activity in China grew at a slower pace last month while it fell in South Korea, with export orders declining in both countries, private sector PMIs for October showed on Monday.
The official PMI survey on Friday showed Chinese factory activity fell for the seventh consecutive month, confirming suspicions that the previous export rush to get ahead of US tariffs had come to an end.
“The PMIs suggest that the Chinese economy lost some momentum in October, with slower growth in the manufacturing and construction sector,” said Zichun Huang, China economist at Capital Economics.
“Some of this weakness may reverse in the near term, but any boost to exports from the latest US-China trade ‘deal’ will likely be modest and broader headwinds to growth will persist.”
