The business climate for global manufacturing companies appears to be worsening, according to a data release from Markit Economics. This analytics firm published regular updates on the state of the world's manufacturing industries, and its latest findings suggest that Europe, the United States and China are all experiencing falling orders and production activity.
On April 23, Markit reported that its Performance of Manufacturing Index (PMI) for the United States grew at the lowest level in over two years. The major factors in this weakness are a significant drop in new orders and overall output, the organization reported.
Chris Williamson, Markit's top economist, indicated in a press statement that structural problems in the global economy and falling consumer demand may be behind the low manufacturing growth.
"The biggest monthly fall in the PMI since June 2010 raises concerns that the U.S. manufacturing expansion is losing momentum rapidly as businesses and households worry about the impact of tax hikes and government spending cuts," Williamson said. "The PMI suggests that output growth has slowed from an annual pace approaching 8 percent earlier in the year to only 2 percent at the start of the second quarter."
China was also a victim of the ongoing economic malaise, with that nation's PMI falling 1.2 percent between the first and second quarters of 2013 to a level of 50.5 percent, which suggests manufacturing growth has virtually stopped. This shift was in line with an overall Gross Domestic Product (GDP) reduction of 0.2 percent the Communist country experienced between the last months of 2012 and the beginning of this year.
As manufacturing is one of the key sectors of the world economy, these developments indicate that further volatility is to be expected in global markets. Investors should take note of these changes and hedge against risks accordingly. One method to consider is the purchase of cash flow real estate, which can provide a steady source of portfolio income. Download our "Free Game Plan Report" today to learn more.