US, China factories slow; Europe, India boom

Wednesday, 4 May 2011 00:00 - - {{hitsCtrl.values.hits}}

WASHINGTON/LONDON: Manufacturing growth softened in the United States and China but firmed in Europe and India, according to reports highlighting the fractured nature of the global economic recovery.

The world’s two largest economies both saw a tempering of factory production in April, with the pace of US manufacturing expansion easing for a second straight month. Still, overall US activity remained firm and input prices rose to their highest in nearly three years, according to the data from the Institute for Supply Management released on Monday.

ISM said its factory index fell to 60.4 in April from 61.2 the month before, above forecasts for a reading of 60. It has held above the 50-threshold that separates growth from contraction since August 2009, and peaked in February 2011.

Despite the decline, analysts were reassured there was not greater spillover into US industry from Japan’s earthquake.

“We have had hits domestically from production and supply constraints from the Japanese disruptions and we are still over 60 on the manufacturing index so it is a very good report given the developments over the last six weeks,” said Kurt Karl , chief US economist at Swiss Re in New York.

The ISM’s measure of prices paid rose to 85.5 from 85, the highest since July 2008. Federal Reserve policymakers have argued that price pressures facing US consumers remain tame.

China’s official purchasing managers’ index dipped to 52.9 in April from 53.4 in March, well shy of market forecasts for an increase to 54.0.

The data sent worrying signals to the global economy, which has grown reliant on Chinese demand as a source of growth with the United States, Europe and Japan struggling to recover from the financial crisis.

With inflation running at its fastest in nearly three years, China has taken a series of policy actions to rein in prices, raising interest rates and banks’ required reserves multiple times, ordering banks to lend less and speeding up the pace of currency appreciation. GERMAN BOOST

The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI), which records manufacturing activity across all the major euro area economies, rose to 58.0 last month from March’s 57.5.