Europe rebounds, Asia falters on tariffs
Euro zone factory activity expanded for the first time since mid-2022 as domestic demand offset the impact from US tariffs, while the Asian manufacturing sector saw shrinkage, private surveys showed on Monday.
There were mixed signals over the Chinese economy, however, as one such survey unexpectedly indicated modest expansion, contradicting an official readout the day before, which showed activity continuing to shrink.
Export powerhouses Japan, South Korea and Taiwan all saw manufacturing activity shrink in August, underscoring the challenge Asia faces in weathering the hit from sharply higher trade barriers erected by US President Donald Trump.
In Europe, Greece and Spain led factory growth while manufacturing in Germany, the bloc's largest economy, shrank albeit at a slower pace.
The HCOB Eurozone Manufacturing Purchasing Managers' Index (PMI) rose to an over-three-year high of 50.7 in August from 49.8 in July, surpassing the 50.0 threshold that separates growth from contraction.
Meanwhile, manufacturing in Germany rose to a 38-month high of 49.8, a whisker away from the 50 mark, offering hope for the economy that shrank 0.3% last quarter on slowing demand from its top trading partner, the US.
The EU and the US struck a framework trade deal in late July, but only the baseline tariff of 15% has so far been implemented.
In Britain, outside the European Union, factory activity suffered a fresh setback in August after signs of a recovery due to worries about trade tensions and tax increases at home.
The S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) stood at 49.7 in August, improving from 48.9 in July but staying below the 50 threshold for two straight months.
South Korea's factory activity also shrank with the S&P Global PMI standing at 48.3 in August, up from 48.0 in July but contracting for the seventh straight month.
Both countries struck a trade deal with the US that eased, but did not remove, the pressure on their export-reliant economies.