Poor manufacturing sector causes concern

With the manufacturing sector declining and showing poor figures worldwide partly due to prospects of global economic slowdown, the service sector is widening and may likely fill in the gap to help shore up the world economic growth.
The dwindling manufacturing sector isn’t new, as the manufacturing employment has been falling everywhere, including China. By contrast, the service sector has been growing and providing jobs. This phenomenon is largely driven by technology that reduces employment in the manufacturing sector and spurs jobs in the service sector.
Of course, the concerns about the manufacturing sector have been triggered by the current status of the manufacturing industry. In the UK, the manufacturing sector grew the least in almost three years in February and new orders barely rose, highlighting the fragility of the economy as it heads into an uncertain year.
Markit Economics said its factory index dropped to 50.8 from 52.9, marking the weakest reading since April 2013. A gauge of new orders was just above the key 50 line that divides expansion from contraction while employment shrank for a second month.
Russia wasn’t any better as its manufacturing industry deteriorated more than forecast in February as new export orders declined while currency volatility and cheap oil darkened the economic outlook.
In China, manufacturing activity shrank at its fastest rate in four years in February, government data showed on Tuesday — a fresh sign of sustained weakness in the world’s second-largest economy.
The official Purchasing Managers’ Index (PMI), which tracks activity in factories and workshops, fell to 49.0 last month, figures from the National Bureau of Statistics (NBS) showed.
It was the lowest figure since 49.0 in November 2011, and was below the median forecast of 49.4 in a Bloomberg survey of economists.
Indeed, there are concerns over China’s economy, a vital driver of global expansion. It grew 6.9 percent last year, its weakest rate in a quarter of a century.
To turn prospects of the slow growth around, China’s leaders — who targeted growth of “about seven percent” — are looking to transform the economy away from the investment and exports of the past to more domestic consumption economy.
ANZ analysts Raymond Yeung and Louis Lam said the government will have to make proactive fiscal moves to support investment, increase deficit spending and boost the money supply if it is to maintain6.5- 7.0 percent growth rate this year.
In January, World Bank report warned that a broad-based slowdown across developing countries could pose a threat to hard-won gains in raising people out of poverty.
“More than 40 percent of the world’s poor live in the developing countries where growth slowed in 2015,” said World Bank Group President Jim Yong Kim. “Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”
With emerging economies accounting for over 58 percent of the global economy, major economies should cooperate with those economies to encourage the structural reforms and help in the infrastructure projects to keep the recession at bay.