*
European PMI data suggests downturn may not be as bad
*
China's private survey shows continued PMI contraction
*
Factory activity shrinks in Japan, South Korea
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Surveys highlight darkening outlook for Asia next year
(Adds European data, comment)
By Jonathan Cable and Leika Kihara
LONDON/TOKYO, Dec 1 (Reuters) - Factory output fell
widely last month as slowing global demand and the impact of
China's COVID-19 lockdowns weighed, although the downturn eased
in Europe and activity in India actually picked up, surveys
showed on Thursday.
While the surveys indicated that factories in the euro zone
still face a harsh winter it may not be as bad as initially
feared and there were signs rampant inflationary pressures were
abating.
Inflation may have peaked, or be close to doing so, in many
economies but steep price rises and increased borrowing costs as
central banks tighten policy aggressively have left indebted
consumers feeling the pinch and forcing them to cut spending.
"Global consumers are reining back on spending on
discretionary goods in a world of stagflation," said Duncan
Wrigley at Pantheon Macroeconomics.
S&P Global's final manufacturing Purchasing Managers' Index
(PMI) for the euro zone rose to 47.1 from October's 46.4, but
was below a preliminary reading of 47.3 and under the 50 level
that marks growth in activity.
An index measuring output, which feeds into a composite
PMI due on Monday and seen as a good guide to economic health,
rose to 46.0 from 43.8, marking its sixth month of sub-50
readings.
"Today's PMI data corroborate our view that manufacturing is
headed for a winter recession but suggest the outlook for the
sector is starting to improve slightly," said Riccardo Marcelli
Fabian at Oxford Economics.
"While indicators suggest that fundamentals are in
better shape than in previous crises, the euro zone is bound to
endure a mild, widespread recession this winter."
Economists in a recent Reuters poll gave a 78% chance of a
recession within a year.
In Britain, outside the European Union, manufacturing
activity fell for a fourth month in a row, as businesses faced
the weakest overseas demand in two-and-a-half years, leading to
job cuts and reduced confidence about the year ahead, its PMI
showed.
The figures added to signs Britain's economy has fallen
into recession, although there was a glimmer of light for the
Bank of England as factory output price inflation slowed to its
lowest since March 2021.
It was a similar story in the euro zone where although
remaining high, both the input and output prices indexes dropped
substantially, likely welcome news to policymakers at the
European Central Bank.
ASIAN WOES
The results highlighted Asia's darkening economic outlook
for 2023, as China's lockdowns disrupt international supply and
heighten fears of a further slump in its economy, the world's
second-largest.
Those lockdowns have hit production and stoked rare street
protests across many cities in China.
Amid the pandemic curbs, Chinese factory activity shrank in
November, a private survey showed. The result implied weaker
employment and economic growth in the fourth quarter.
China's Caixin/S&P Global manufacturing PMI stood at 49.4 in
November, up from 49.2 in the previous month. It has been below
50 for four consecutive months.
The figure followed downbeat data in an official survey on
Wednesday that showed manufacturing activity had hit a
seven-month low in November.
Analysts see mounting downside risks to China's economic
growth in the fourth quarter, despite a flurry of policies to
shore up activity, including cuts to banks' required reserve
ratios and support for the sluggish property sector.
The impact of China's woes was felt widely across Asia.
Taiwan's PMI stood at 41.6 in November and Vietnam's PMI fell to
47.4. Indonesia's slid to 50.3 from 51.8.
Manufacturing activity also contracted in export-reliant
economies, including Japan and South Korea, and in emerging
nations, such as Vietnam, underscoring widening damage from weak
global demand and stubbornly high input costs, surveys showed.
Japan's au Jibun Bank PMI also fell, to 49.0 in November
from 50.7, its first contraction since November 2020.
South Korea's factory activity shrank for a fifth straight
month but the downturn moderated slightly, possibly suggesting
the worst was over for businesses there.
However, South Korea's exports in November suffered their
steepest annual drop in 2-1/2 years, separate data showed, hit
by cooling global demand in major markets led by China and a
downturn in the semiconductor industry.
In a rare bright sign, India saw factory activity expand in
November at its fastest pace in three months, thanks to robust
demand for consumer goods and a slowdown in input-cost
inflation.
(Reporting by Jonathan Cable and Leika Kihara; Editing by
Bradley Perrett and Susan Fenton)
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