Global gloom continues as US manufacturing at three-year low
US MANUFACTURING suffered its weakest quarter in three years while conditions at European businesses worsened and China’s economy continued to lose momentum.
The latest data shed more light on the difficult task facing global policymakers, particularly in Europe and the United States, who have tried to boost growth with aggressive monetary stimulus.
The US manufacturing sector ended its worst three months since the third quarter of 2009 in September, according to financial information firm Markit. Export orders fell for a fourth month running as demand from Europe and Asia faded, with September’s slide the steepest in nearly a year.
“Manufacturing isn’t looking good,” said David Sloan, economist at 4Cast in New York, adding that “the global situation is a restraint on the US economy.Certainly, there is not going to be much growth in Europe. Growth in Asia, and China in particular, is slowing down, so U.S. growth is going to have to be domestically generated.”
There was little indication that the European Central Bank’s plan to buy the government bonds of troubled eurozone states has boosted confidence among eurozone businesses.
Markit’s composite eurozone purchasing managers index fell to 45.9 in September from 46.3, and Markit said it suggested the eurozone economy could shrink by roughly 0.6 per cent in the third quarter.
“The fall in the PMI is another reminder that the ECB’s new asset purchase programme is not an answer to all of the region’s problems,” said Ben May, European economist at Capital Economics. “The eurozone recession looks set to deepen in the latter part of the year.”
The China HSBC manufacturing PMI inched up in September to 47.8 from August’s nine-month low of 47.6, suggesting the world’s second-largest economy remains on track for a seventh quarter of slowing annual growth. “In order to convert hopes into reality and avoid an outright hard landing, the Chinese authorities have to step up again their accommodative efforts on both the fiscal and the monetary side,” said Nikolaus Keis, economist at UniCredit. China’s economic slowdown is expected to reach its nadir this quarter, with a recovery of momentum delayed until the final quarter, leaving growth for 2012 likely to fall below 8 percent, a level last seen in 1999, a Reuters poll showed last week.
European Union and Chinese leaders are meeting in Brussels on Thursday leaders to try to bridge growing differences over trade and find common ground on tackling Europe’s debt crisis.
European manufacturers performed slightly better than economists had hoped this month, while the downturn in Germany, the euro zone’s largest economy, also eased a bit.
“Whether or not that will last is the big question. We’re not altogether hopeful about that,” said Markit chief economist Chris Williamson.
However, trouble for French factories and service-oriented businesses increased at a faster pace than expected.
Altogether, the surveys bolstered expectations that the ECB will cut its main interest rate in October to a new record low.
“Further macroeconomic stimulus - including a weaker euro and an ECB rate cut - is likely to be needed to put the region on a path of sustained growth and hence ensure the survival of (the euro zone),” said Martin van Vliet, economist at ING.
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Wednesday 19 June 2013
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