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U.s. And China Factories Slow; Europe, India Boom

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Manufacturing growth in the world's two biggest economies softened in March but firmed in Europe and India, according to reports highlighting the fractured nature of the global economic recovery.

The United States and China both saw a tempering of factory production in April, with the pace of U.S. manufacturing expansion easing for a second straight month.

Still, U.S. activity remained firm and input prices rose to their highest in nearly three years, according to 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 previous month, slightly 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.


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 Markit Eurozone Manufacturing Purchasing Managers' Index, which records manufacturing activity across all the major euro area economies, rose to 58.0 last month from March's 57.5. The index hit a near-11-year high of 59.0 in February.

Frustratingly for policymakers, the bounce was once again driven by Germany, Europe's largest economy, and France, whose growth overshadowed a continued slide to stagnation in Spain and persistent contraction in Greece.

"Manufacturing activity was once again robust in April in the core northern euro zone economies, led by Germany. Elsewhere the situation was not so bright," said Howard Archer at IHS Global Insight.

Separate figures showed India's factories expanded in April for the 25th consecutive month and at their strongest pace since November, with the PMI rising to 58.0 from 57.9 in March, well above the 50 mark that divides growth from expansion.

Thank god Germany is expanding, at least they will be able to foot the bill for the PIIGS. Looks like Europe is splitting into a 2 tier system, convergence of the economies isn't happening. Germany is earning to transfer it's wealth to the PIIGS. I wonder what manufacturing activity is like in Greece?

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Job creation also increased in northern Europe, with Ireland for the first time joining the job recovery in the manufacturing sector.

However, a slowdown in orders and rising input prices threaten growth over the rest of the year, said Markit in its monthly report.

"The euro area purchasing managers' index (PMI) was boosted by output and new orders both rising slightly faster than indicated by the flash estimates," Markit said. "An acceleration in the rate of increase of output – to one of the fastest seen during the past 10 years – contrasted, however, with a slight easing in growth of new orders.

"Although still strong by historical standards, orders rose at the weakest pace since November, suggesting that production growth may slow in coming months. A further strong increase in new export orders was also seen, though down on the flash reading."

Also, manufacturing output in Greece contracted and a dramatic slowdown in Spain threatened to widen a growing divide between the recovering northern European economies and the south. Output in Italy ground to a halt, it said.

In March the outspoken minister of the economy in Catalonia, Andreu Mas-Colell, said Spain's recovery was vulnerable to rate rises by the European Central Bank and a persistently highly valued euro.

I'm sure it will all be fine, the Spanish don't need a bailout anyway and Italy certainly don't.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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