Arab Today, arab today europe asia manufacturing wilts again
Last Updated : GMT 06:30:05
Arab Today, arab today
Arab Today, arab today

Europe, Asia manufacturing wilts again

Arab Today, arab today

Arab Today, arab today Europe, Asia manufacturing wilts again

London - Agencies

Factory output in Europe and Asia wilted again in September, flagging a return to recession for the euro zone and a seventh straight quarter of slowing growth in China, business surveys showed yesterday. The data showed companies across the world have yet to feel the benefit of aggressive monetary stimulus launched by the world\'s major central banks over the last two months. While hinting the downturn will not now get much worse in China and some large European countries, the latest purchasing managers indexes (PMIs) showed the global economy concluded the third quarter in largely downbeat style. US manufacturing grew for the first time in four months, buoyed by a jump in new orders and more jobs. The increase is a hopeful sign that the economy may be improving after a weak stretch. The Institute for Supply Management, a trade group of purchasing managers, said yesterday that its index of factory activity rose to 51.5. That\'s up from 49.6 in August. A reading above 50 signals growth and below indicates contraction. The index had been below that threshold from June through August. Euro zone factories suffered their worst quarter since the dark days of early 2009, when major economies were steeped in the worst recession since World War II. There was nothing to suggest any of its major economies will do anything other than contract for months to come. \"This is something that is going to persist into the fourth quarter,\" said Nick Matthews, euro area economist at Nomura. \"Even when you look at some of the forward-looking (PMI) indicators as a whole, they\'re still extremely weak for the area as a whole. The position still looks extremely vulnerable.\" Although there were signs the downturn is gradually starting to ease in German, Italian and Spanish industry, in British manufacturing it steepened by an unexpectedly large margin. Markit\'s Eurozone Manufacturing Purchasing Managers\' Index (PMI) rose to 46.1 in September from 45.1 in August and above the preliminary reading of 46.0. But that was its 14th month below the 50 mark that divides growth from contraction. Unemployment in the euro zone stayed at a record high in August, as official data yesterday further highlighted the human cost of the bloc\'s three-year debt crisis. Still, investors largely shrugged off the data, taking fresh positions in European shares after suffering some hefty losses last week. The surveys did little to alter the view among economists that central banks in Europe will likely have to take more action to boost their flagging economies, although probably in November rather than this week. Britain\'s manufacturing sector shrank more than expected in September as export orders fell and costs soared, supporting view the Bank of England will extend its asset purchases once the current round is completed in November. \"We rule out that the sector will return on a sustainable upward trend anytime soon,\" said Annalisa Piazza, economist at NewEdge Strategy. The PMIs painted a now-familiar picture of Asian manufacturing struggling in the face of tepid demand from Europe. China\'s official manufacturing purchasing managers\' index (PMI) showed factory activity contracted for a second straight month in September, although at a slower rate than in August. It underscored expectations that the motor of the global economy in recent years almost certainly endured a seventh straight quarter of slowing growth. Overall, September\'s manufacturing PMI CNPMIB=ECI rose to 49.8 in September from 49.2 in August, which had been the lowest reading since November 2011. \"The data continues to reinforce the hard landing that we have predicted for China, because this is the second consecutive month of a sub-50 reading,\" said Prakash Sakpal of ING in Singapore, which forecasts China\'s economic growth will be close to 7 percent in both the third and fourth quarters of this year. Two cuts to interest rates, an easing of compulsory bank reserve requirements that freed about 1.2 trillion yuan ($190 billion) for lending and approval of more than $150 billion worth of infrastructure projects have so far failed to arrest the decline in China\'s overall growth. The global currents dragging on China are also being felt in its next largest rival Japan, where the quarterly Bank of Japan \"tankan\" survey of business sentiment reflected the central bank\'s view that growth will stall in the remainder of the financial year to March 2013. Taiwan\'s PMI fell to its lowest in 10 months and South Korea reported a small year-on-year decline in exports. \"I don\'t see troubles stabilizing as yet. It will take a while longer until global demand shows signs of stabilization,\" said Saktiandi Supaat, foreign exchange research head at Maybank in Singapore. Arab news

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