NEW YORK: China's vast manufacturing sector grew in early December and US factories were having their best month since April, surveys showed on Friday, adding to hopes that the world's top two economies were on the mend.
Solid growth from the United States and China will be crucial to reviving the world economy in 2013, particularly with the euro zone likely sliding deeper into recession.
A possible budget crisis in the United States at year-end tempered investor optimism, however, and added a big dose of uncertainty to the economic outlook for the year ahead.
Investors and economists fear the United States could fall back into recession if lawmakers can't strike a deal to avert the "fiscal cliff" and allow some $600 billion in automatic tax hikes and spending cuts to take effect in 2013.
That's a grim prospect for global growth, particularly since the 17-country euro zone is already in recession.
While an index of euro zone manufacturing and service sector activity rose to a nine-month high this month, it still showed contraction in both areas. That's consistent with the economy shrinking by 0.5 percent in the fourth quarter.
The news was better in Asia. The HSBC flash PMI showed China's manufacturing sector expanded in December at its fastest pace in 14 months as new orders and employment rose, adding to evidence of a pick-up in the economy that helped lift sentiment.
The data was "a further sign that the Chinese economy is already starting to recover," said Nikolaus Keis at UniCredit. In the United States, financial information firm Markit said its manufacturing index showed the sector grew at its quickest pace in eight months as demand from domestic and foreign customers increased.
Separate data showed factory output posting its sharpest increase in nearly a year in November as auto production rebounded.
Stronger manufacturing should help bolster a US economy that has seen slow but steady improvement in employment and consumer spending and signs of life in the housing market.
"People are always hoping for good news from the United States and China, as both economies are the main drivers of global economic activity," said Tom Porcelli, chief US economist at RBC Capital Markets.
However, he said a more closely watched gauge of US factory activity published earlier this month by the Institute of Supply Management showed the sector shrank in November, making it premature to conclude manufacturing was improving.
indiatimes.com
Solid growth from the United States and China will be crucial to reviving the world economy in 2013, particularly with the euro zone likely sliding deeper into recession.
A possible budget crisis in the United States at year-end tempered investor optimism, however, and added a big dose of uncertainty to the economic outlook for the year ahead.
Investors and economists fear the United States could fall back into recession if lawmakers can't strike a deal to avert the "fiscal cliff" and allow some $600 billion in automatic tax hikes and spending cuts to take effect in 2013.
That's a grim prospect for global growth, particularly since the 17-country euro zone is already in recession.
While an index of euro zone manufacturing and service sector activity rose to a nine-month high this month, it still showed contraction in both areas. That's consistent with the economy shrinking by 0.5 percent in the fourth quarter.
The news was better in Asia. The HSBC flash PMI showed China's manufacturing sector expanded in December at its fastest pace in 14 months as new orders and employment rose, adding to evidence of a pick-up in the economy that helped lift sentiment.
The data was "a further sign that the Chinese economy is already starting to recover," said Nikolaus Keis at UniCredit. In the United States, financial information firm Markit said its manufacturing index showed the sector grew at its quickest pace in eight months as demand from domestic and foreign customers increased.
Separate data showed factory output posting its sharpest increase in nearly a year in November as auto production rebounded.
Stronger manufacturing should help bolster a US economy that has seen slow but steady improvement in employment and consumer spending and signs of life in the housing market.
"People are always hoping for good news from the United States and China, as both economies are the main drivers of global economic activity," said Tom Porcelli, chief US economist at RBC Capital Markets.
However, he said a more closely watched gauge of US factory activity published earlier this month by the Institute of Supply Management showed the sector shrank in November, making it premature to conclude manufacturing was improving.
indiatimes.com
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