Global Manufacturing: A Sector in Turbulence Amid Trade Tensions

Factory activity across Europe displayed signs of stabilization in June, but many Asian markets experienced contractions, primarily due to apprehensions over U.S. tariffs that continue to suppress demand.

The euro zone's HCOB manufacturing Purchasing Managers' Index, assembled by S&P Global, inched up to 49.5 from May's 49.4. Despite the improvement, it remained under the growth threshold of 50.

Significant variations emerged among European countries, with Ireland achieving a 37-month high in PMI, while Germany's figures, though less severe, still pointed to contraction. Meanwhile, outside the EU, Britain's manufacturing sector showed promise of recovery from its prolonged downturn.

Concerns continue as the underlying fragility reflected in Tuesday's surveys highlights the complexity policymakers face due to U.S. President Donald Trump's unpredictable tariff policies.

Central bank leaders are meeting for their annual summit, dominated by discussions on whether Trump's economic tactics could dismantle the longstanding global financial system. In Asia, Japan saw its manufacturing sector expand for the first time in over a year, despite overall weak demand.

South Korea's manufacturing contracted for the fifth month, albeit at a slowed pace due to political stability following a snap election. Meanwhile, China's Caixin PMI rose due to an uptick in new orders, although trade negotiations with the U.S. remain stalled.

India's manufacturing sector was a standout in the region, reaching a 14-month high due to a surge in international sales and record hiring rates.

(With inputs from agencies.)