FACTORY growth eased in Europe and Asia — markedly in China — last month, surveys showed yesterday
The world’s major economies curtail orders as factory growth hits the skids
| ANDY BRUCE and EMILY KAISER |
Published: 2011/06/02 08:22:33 AM |
FACTORY growth eased in Europe and Asia — markedly in China — last month, surveys showed yesterday, feeding concern that the world’s main economic engines are cooling fast as richer countries curtail orders.
Purchasing managers indices, (PMIs), measuring the activities of thousands of factories across the world, sank to multi-month lows in China and Europe, where even France and Germany, the regional pacesetters, showed fresh signs of sagging.
The surveys for South Korea, India and Taiwan also showed the pace easing, while US figures due later yesterday were expected to complete the picture of global manufacturing surge that may be running out of stream.
Some slackening was expected as quake- and tsunami-damaged Japan struggled to churn out parts for the automotive and high-tech industries. Lacklustre growth and consumption in the US and Europe have also restrained demand. "I would be loathe to say there’s a sharp slowdown in the pipeline, but some momentum seems to be lost," said Mark Miller, global macroeconomist at Lloyds Bank Corporate Markets.
The Markit Eurozone Manufacturing PMI for May slipped to 54,6 from 58 in April, its 20th month above the 50 mark that signifies growth but showing a sharp pullback on fresh signs of decline in the currency bloc’s debt-laden periphery.
Spanish manufacturers returned to contraction, while Italian and Irish factories saw a marked slowdown in growth.
Supply-chain pressures dented the French and German PMIs, which had been hovering near record highs.
Markit described the declines in peripheral countries as worrying, suggesting they could face growing difficulty in cutting their enormous public deficits.
"In the case of the euro zone, some of the volatility you’re seeing in government bond markets doesn’t help, which is clearly a threat to growth via potentially higher longer-term interest rates," said Mr Miller.
Higher interest rates have already had a marked effect on growth in Asia, where investors watch nervously for evidence that the slowdown there is worsening as central bankers tighten credit to combat inflation.
That was most evident in China, where the official PMI touched a nine-month low, below forecasts, as new orders fell sharply. A private survey led by HSBC hit its lowest mark in 10 months, held back by power shortages and a clamp on credit.
If there was a silver lining, it was that factory cost inflation fell in most of the surveys — both in Asia and Europe — which will ease pressure on central bankers to ratchet up inflation-fighting measures. In the euro zone, there were clear signs that inflation pressures had started to ease.
"The brighter news was that recent falls in commodity prices helped drive the greatest easing in input cost inflation since November 2008," said Chris Williamson, Markit’s chief economist.
"The combination of weaker inflationary pressures and the steep easing in the pace of growth may encourage policy makers to hold off on interest rate hikes."
India was a key exception as price pressures showed no sign of easing, leading economists to predict the central bank will continue tightening. India’s PMI dipped to 57,5 in May from 58 in April.
In China, where authorities have already taken steps to curb inflation, economists distinguished between the current slowdown suggested by the PMIs and the 2008 slump, when the financial crisis crippled global trade.
"It is important to point out that China is experiencing an economic slowdown, not a collapse like in the aftermath of Lehman’s bankruptcy," said Dong Tao, a Credit Suisse economist.
HSBC’s China PMI dipped to 51,6 last month from April’s 51,8, holding above the 50-point level.
The government’s data told a similar story. New export orders dipped to 51,1, suggesting demand was weakening in China’s biggest export destinations, Europe and the US. British manufacturing PMI hit a 20-month low in May of 52,1 from 54,6 in April, blamed on a weaker domestic market — especially for consumer goods. Reuters
I would be loathe to say there’s a sharp slowdown in the pipeline, but some momentum seems to be lost
No comments:
Post a Comment