London / Beijing - Increasing demand for manufactured goods drove global factory activity higher last month but a spurt in the euro zone masked a widening disparity among some of the bloc’s key members.
As year-end approaches, the global economy is showing signs of a more solid recovery, with encouraging signs of an acceleration from some economies, particularly Britain.
But growth in the euro zone remains weak and Markit, the compiler of the monthly purchasing managers indices (PMIs), said yesterday there was evidence of a renewed downturn in France and Spain.
Markit’s euro zone manufacturing PMI rose to 51.6 last month from October’s 51.3, a two-year high. It just pipped an earlier flash reading of 51.5 and was the fifth consecutive month of growth.
The output index nudged up to 53.1 from 52.9.
“It is coming from a pretty low level,” said Ben May at Capital Economics.
“Signs of weakness in France [are] clearly a worry and suggest that the divergence between it and Germany remains firmly in place. It would raise more concerns if it were to continue or intensify.”
France’s PMI fell to a five-month low of 48.4 from 49.1, chalking up its 21st month below 50 (indicating contraction). Spain’s PMI sank back below the 50 break-even mark after spending the past three months in growth territory.
By contrast, data from Germany, Europe’s biggest economy, showed factories there had their best month since mid-2011. Italian figures showed manufacturing there also picked up speed.
The euro zone escaped from its longest recession earlier this year, supported by better-than-expected growth in Germany, but a Reuters poll last month suggested that the bloc’s economy would grow only moderately next year.
A similar indicator for Britain was much stronger. At 58.4, it easily topped the highest forecast and is showing the strongest growth in nearly three years. Data due later from the US was expected to show an easing from October’s two-and-a-half-year record.
Chinese PMIs suggested resilience, which augurs well for Beijing’s plans to gear the economy more towards domestic consumption and away from investment-led growth. Beijing has said it would accept lower economic growth to achieve this shift.
The HSBC/Markit China PMI edged down to 50.8 in November from a seven-month high of 50.9. China’s official PMI, which focuses more on bigger firms, was released at the weekend. It held at 51.4 in November, unchanged from October’s 18-month high.
“The more forward-looking parts of the reports, however, imply some moderation of economic activity further down the road, underpinning our view that Chinese economic growth may have peaked in the third quarter,” Nikolaus Keis at UniCredit said.
The HSBC survey showed new export orders growth dipped to a three-month low, but the official PMI showed an acceleration.
Japan’s PMI, released on Friday, pointed to the quickest manufacturing growth in more than seven years as new export orders reached their highest level in over three years.
Prime Minister Shinzo Abe has overseen a massive stimulus this year to revive the economy, which has now grown in the past four quarters.
Factory activity in India expanded after three months of contraction as new orders grew for the first time since May, supporting government figures on Friday that suggested an economic slump might have bottomed out. – Reuters