Separate Data Show There's Still Hope Despite a Slumping Economy and Slow World Growth
New data has revealed slumping manufacturing industry in China, weakening markets in the United States and EU zone, and easing world growth this year. Hence, central banks need to keep on supporting the economy to avoid possible global crisis.
Chinese manufacturing companies have recorded fastest decrease in three years, with the government recording a Purchasing Managers' Index (PMI) of 49.7 in August - down from 50.0 in July.
"Today's reading suggests that manufacturing activities in China remain weak. We now expect GDP to grow by an annual 6.4 percent in the third quarter," economists at ANZ bank say.
Meanwhile, stocks and prices of basic commodities on major markets in the United States have dropped, as they try to estimate the possibility that the Federal Reserve will increase interest rate by September.
"It's all consistent with a global economy which clearly is struggling to make any significant headway," Commerzbank economist Peter Dixon says, according to an article posted Wednesday on Reuters.
"As a consequence central banks which are thinking about raising interest rates in the near future will be looking at these numbers and it will maybe give them a little pause for thought."
Aside from that, slow growth in the US manufacturing sector has been recorded in August - the weakest in almost two years.
"August's survey highlights that the U.S. manufacturing sector continues to struggle under the weight of the strong dollar and heightened global economic uncertainty, but resilient domestic spending and subdued cost pressures are keeping the recovery on track," Markit senior economist Tim Moore comments.
"Reflecting this, new orders from abroad have now fallen in four of the past five months, which represents the weakest phase of manufacturing export performance since late 2012."
On the other hand, a couple of months after a 1-trillion-euro stimulus program has been launched by the European Central Bank, slow-paced growth in the euro zone business activity has been recorded in May.
"The May (Purchasing Managers' Index) surveys were broadly disappointing although nothing terribly bad," TD Securities head of global strategy Richard Kelly states.
"There is no question the ECB is going to continue with quantitative easing up until September 2016. China is just starting the amount of additional liquidity and stimulus that will be needed to safely rebalance the economy," he adds.
Still, there is good news. Overseas demand for EU goods has increased, what with customers taking advantage of cheaper products due to a weak euro. The higher demands have spiked up the index of export orders to 53.0, a new record after 13 months.
South Korea, on one hand, has slumping exports. Weak demands in Europe, the US and China has caused its export industry to fall by almost 15% - a worrying trend for trade cycle around the world, according to Frederic Neumann of HSBC.
"The country, after all, has long been a reliable bellwether. Korea's PMI is still negative, and new export orders again contracted, even if at a less rapid pace than before," he says.
But the weakening economy might not be applicable to all nations, with Japan going against the downward trend. Its manufacturing growth is strongest, after a contraction in Q2. There are expectations that the country's economy will bounce back this quarter.
