Manufacturing is faltering in the U.S. and a number of key economies around the world, darkening the outlook for the global economy and increasing the likelihood that central banks will ease policy to provide support.
The Purchasing Managers Index for U.S. manufacturing activity declined to 50.1 in June, the lowest level in nearly a decade, according to a survey conducted by data firm IHS Markit and released Friday. A reading above 50 indicates growth, but the figure was down from 50.5 in May and followed other data showing U.S. manufacturing output has declined since the end of last year.
Meanwhile, manufacturing activity in Europe contracted in June, wrapping up the weakest quarter for the goods-producing sector in six years, IHS data showed Friday. A similar survey of Japanese manufacturers also published on Friday found activity was at its worst in three years.
U.S. manufacturers attributed the pullback to several factors, including escalating trade tensions, cooling global growth, slowing momentum after last year’s burst of investment and a tight labor market that is constraining production.
In Europe, economists are divided on whether the factory slowdown is largely a consequence of disruptions to trade and investment or a more short-lived pause after a long expansion.
The World Bank earlier this month lowered its forecast for global economic growth in 2019 to 2.6% from its January estimate of 2.9%, citing trade disputes and declining business confidence.
Both the Federal Reserve and European Central Bank signaled this week they are considering cutting interest rates if the outlook doesn’t improve.
United States Steel Corp. said Tuesday that, because “market conditions have softened,” it was idling two blast furnaces to reduce production amid declining manufacturer demand. Charlotte, N.C.-based Nucor Corp. , the largest U.S. steel producer, said it expected declines in two big markets this year: power transmissions and car production. “It’s just a natural slowdown after two years of very heavy investment,” Chief Executive John Ferriola told investors Thursday.
Office-furniture maker Steelcase Inc. said some U.S. customers are asking to delay deliveries because they can’t find the workers needed to finish construction of new offices.