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Manufacturing slump feeds financial woes

September 3, 2016

business

 

Economic growth is what people are hoping for; the smallest sign that the economic woes that have been affecting the world  are starting to recede would make many jump for joy.

However, sadly this in not the case. This can be seen if you look at the manufacturing activity of countries and recent news has highlighted that this sector is still continuing to contract.

TAIZHOU, CHINA - NOVEMBER 01:   Labourers work...

TAIZHOU, CHINA - NOVEMBER 01: Labourers work at a shipbuilding plant on November 1, 2015 in Taizhou. (Image credit: Getty Images via @daylife)

Spain have had a rough few years with unemployment rocketing, the country is on the verge of bankruptcy, and their manufacturing sector is continuing to contract.

There have been improvements in exports but these have yet to move into actual growth. The most recent figures highlight the 16th month in a row that has seen a decline in figures, and with the government expecting further contraction of the economy as cuts to public spending begin to take hold, the future is looking decidedly bleak for Spanish manufacturing.

Spain is not alone. China, who have been experiencing growth for the past few years are also seeing their manufacturing sector contract.

Manufacturing is measured by Purchasing Managers’ Index or PMI; activity reading below 50 shows contraction and China’s most recent activity give a reading of 49.2, this is the lowest that it has been since November 2015. This contraction has been attributed to the slowdown in the domestic market and the financial climate facing many different markets around the world.

The general decline in manufacturing is the view for many different areas. Ireland’ s growth slumped from 53.9 to 50.9 between July and  August 2016, although this is technically still in growth it is a steep drop that will need to be looked at to ensure that this decline does not continue.

Looking forward it is going to be a tough road for many industries, and manufacturing will be relying on the international markets to balance out so that it can begin to grow. This will take time and in some cases may not look likely, so a focus on domestic manufacturing may be the main key to raising PMI and help to pull the whole economy back into growth.

 

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