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Business Title: Manufacturing Growth Weakens from China to Europe as Global Economy Ebbs June 1 (Bloomberg) -- Manufacturing growth from China to the euro region and the U.S. slowed in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and regional shocks. A purchasing managers’ index for China showed the slowest pace of expansion in nine months, while the equivalent measure for the euro area fell to a seven-month low. The U.S. gauge of factory growth was at its weakest in a year, Russia’s index signaled “near stagnation,” and reports from Poland to Hungary also showed a loss of manufacturing momentum. The synchronized drop in global factory indicators is adding to evidence that the world’s economy is struggling to withstand the combination of rising oil prices, the aftermath of Japan’s earthquake and Europe’s sovereign-debt crisis. “We can see some slowing momentum globally” and “Japanese supply disruptions might have played some role,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “Export demand won’t be quite as dynamic as before -- we’re losing some steam. I don’t see any collapse however.” The U.S. Institute of Supply Management’s measure of factory growth fell more than projected to 53.5 last month, the lowest level since September 2009, from 60.4 in April, the Tempe, Arizona-based group said today. Economists forecast a decline to 57.1, according to the median of 83 estimates in a Bloomberg News survey. U.S. construction-spending growth rose in April for a second month, a separate report showed. Job Growth Companies in the U.S. added fewer workers than forecast in May. Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in a Bloomberg News survey called for a 175,000 gain. China’s purchasing managers’ index was at 52, compared with 52.9 in April, the China Federation of Logistics and Purchasing said in an e-mailed statement today. The number was higher than the median forecast of 51.6 in a Bloomberg News survey of 16 economists. “China is slowing generally and is not heading for a hard landing,” said Andrew Kenningham, an economist at Capital Economics Ltd. in London. In Europe, “manufacturing growth is slowing very clearly from rapid rates early this year to modest rates. It’s been a sharper slowdown in Europe than in the U.S.” Euro-Area Growth In the 17-nation euro region, a gauge of manufacturing slipped to 54.6 from 58 in April, London-based Markit Economics said today. That’s below an initial estimate of 54.8 released on May 23 with countries from Germany to Spain showing declines. The euro-region economy may cool after expanding at the fastest pace in almost a year in the first quarter as governments toughen spending cuts while surging energy costs sap consumers’ purchasing power. European economic confidence worsened in May and the European Central Bank signaled last month it may keep borrowing costs on hold at its June meeting. The euro region’s gross domestic product may increase 2 percent this year and next, lagging behind the U.S. economy’s expansion of 2.6 percent and 3.1 percent in 2011 and 2012, respectively, the Paris-based Organization for Economic Cooperation and Development said on May 25. In Japan, which was hit by a nuclear disaster after an earthquake, GDP may rise 2.2 percent in 2012 after declining this year, it said. Growth Questions A U.K. factory gauge based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply declined to 52.1, the lowest since September 2009, from a revised 54.4 in April. Output and new orders fell for the first time since the middle of 2009. “The fact that the output and new orders fell for the first time in two years does raise questions about where economic growth will come from,” said Hetal Mehta, an economist at Daiwa Capital Markets Europe in London. In Russia, the Purchasing Managers’ Index fell to 50.7, from 52.1 in April, HSBC Holdings Plc said in a report today, citing data compiled by Markit. It “signaled a near-stagnation of Russian manufacturing growth in May and a sharp easing in cost inflationary pressure,” HSBC said in the report. Polish manufacturing growth slowed for a second month, Czech factory expansion fell to the lowest in 15 months and Hungary’s equivalent index also declined. Today’s reports show “something of a normalization after extremely high levels globally,” said Commerzbank’s Solveen. “It was clear that these PMI levels couldn’t be maintained. We expect to see some stabilization in global manufacturing growth over the coming months.”
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#1. To: Brian S (#0)
(Edited)
Free trade/globalization does not work. It is a failure. Now we need to get t hose who advocated this economic system - pretty much everyone important - to publicly proclaim this fact. But when communism was shown to be a failure those that were in power and advocated this system refused to believe their ideology did not work and carried on for a generation as communist economies collapsed. We are seeing that now. How many free trade advocates from both political parties will admit that the system they championed has failed? Even now, so called conservative Republicans deny reality and proclaim Reaganomics works despite the failures of those ideological assumptions.
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