Factory growth slows in Europe

Manufacturing growth from China to the euro region and the US slowed in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and regional shocks. A purchasing managers' index for China showed the slowest pace of expansion in nine months, while the equivalent measure for the euro area fell to a seven-month low. The US gauge of factory growth was at its weakest in a year, Russia's index signaled, "near stagnation," and reports from Poland to Hungary also showed a loss of manufacturing momentum. The synchronised drop in global factory indicators is adding to evidence that the world's economy is struggling to withstand the combination of rising oil prices, the aftermath of Japan's earthquake and Europe's sovereign-debt crisis. Losing some steam "We can see some slowing momentum globally," and, "Japanese supply disruptions might have played some role," said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. "Export demand won't be quite as dynamic as before — we're losing some steam. I don't see any collapse however." The US Institute of Supply Management's measure of factory growth fell more than projected to 53.5 last month, the lowest level since September 2009, from 60.4 in April, the Tempe, Arizona-based group said on Tuesday. Economists forecast a decline to 57.1, according to the median of 83 estimates in a Bloomberg News survey. US construction-spending growth rose in April for a second month, a separate report showed. Companies in the US added fewer workers than forecast in May. Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in a Bloomberg News survey called for a 175,000 gain. China index China's purchasing managers' index was at 52, compared with 52.9 in April, the China Federation of Logistics and Purchasing said in an e-mailed statement today. The number was higher than the median forecast of 51.6 in a Bloomberg News survey of 16 economists.