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Posted on January 24, 2025
4 min readLast updated: January 27, 2026
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Factory activity in Europe, Asia, and the US ended 2024 weak due to Trump's tariff threats and China's fragile recovery.
(Reuters) -Factory activity in Asia, Europe and the U.S. ended 2024 on a soft note as expectations for the new year soured amid growing trade risks from a second Donald Trump presidency and China's fragile economic recovery.
A manufacturing slowdown in the euro zone intensified last month, with scant signs of a rebound anytime soon as the bloc's three largest economies - Germany, France and Italy - remained stuck in an industrial recession.
Manufacturing purchasing managers' indexes for December from across Asia published on Thursday showed factory activity slowing in China and South Korea although there were some signs of a pickup in Taiwan and Southeast Asia.
In the U.S., activity contracted for a sixth straight month to wind up another year of below-par production across the factory sector.
U.S. President-elect Trump has pledged to impose tariffs across the board, with bigger barriers on imports from three major trading partners - Mexico, Canada and China.
The Caixin/S&P Global manufacturing PMI for China nudged down to 50.5 in December from 51.5 the previous month, undershooting analysts' forecasts and indicating activity grew only modestly.
Gabriel Ng, assistant economist at Capital Economics, said Beijing's increased policy support in late 2024 provided a near-term boost to growth, which is likely to be seen in other fourth quarter indicators.
"And this improvement should carry over into early 2025," Ng said. "But the boost probably won't last more than a few quarters, with Trump likely to follow through on his tariff threat before long and persistent structural imbalances still weighing on the economy."
In Europe, HCOB's euro zone manufacturing Purchasing Managers' Index, compiled by S&P Global, dipped to 45.1 in December, just under a preliminary estimate and further below the 50 mark separating growth from contraction, where it has been since mid-2022.
"Output in the euro zone remained under pressure at the end of 2024, held back by a continued slide in new orders in both the domestic market and in exports," noted Claus Vistesen, chief euro zone economist at Pantheon.
Factory activity in Germany fell deeper into contraction territory last month on sharper declines in output and new orders while activity in France declined at the fastest pace in more than four years.
In Britain, outside the European Union, factory activity shrank at the quickest rate in 11 months and firms reduced staffing levels due to higher taxes and weak foreign demand.
Meanwhile, the S&P Global U.S. Manufacturing Purchasing Managers' Index fell to 49.4 in December from 49.7 in November, but it was up from the 'flash' reading of 48.3. A separate reading on the U.S. factory sector from the Institute for Supply Management will be released on Friday and is also expected to show sluggishness.
"U.S. factories reported a tough end to 2024, and have scaled back their optimism for growth in the year ahead," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said in a statement. "Factories are reporting an environment of subdued sales and inquiries, notably in terms of exports."
Elsewhere in Asia, South Korea's PMI showed activity shrinking in December and the decline in output gathering pace, a stark contrast to better-than-forecast export growth figures released on Wednesday.
South Korea's central bank governor said on Thursday the pace of monetary policy easing would need to be flexible this year due to heightened political and economic uncertainty.
In addition, South Korea is dealing with the hit to business confidence from a national political crisis after a failed bid by President Yoon Suk Yeol last month to impose martial law.
Earlier in the week, Japan's PMI showed activity shrinking in December, albeit at a slower pace. Malaysia and Vietnam also reported declines in factory activity.
India's manufacturing activity grew at its weakest pace for 2024, its PMI showed, although the South Asian economy's factories continued to outperform regional peers, reporting uninterrupted expansion for the past three-and-a-half years.
(Reporting by bureaus; Writing by Sam Holmes and Indradip Ghosh; Editing by Shri Navaratnam, Ross Finley, Christina Fincher and Chizu Nomiyama)
The article discusses the global factory slowdown at the end of 2024 due to Trump's tariff threats and China's economic challenges.
The euro zone's manufacturing sector remains in recession with no signs of immediate recovery.
US factory activity has contracted for six consecutive months, with subdued sales and export inquiries.
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