GROWTH IN manufacturing activity in the US and China is slowing but shows little sign of a slide towards recession, according to official data.
The purchasing managers’ index in China dropped to 50.4 from 51.2 in September, while the US Institute for Supply Management’s PMI declined from 51.6 in September to 50.8 last month. Above 50 indicates expansion; below 50 means contraction.
China’s official index has not fallen below 50 since February 2009, at the height of the crisis.
The data reflects a global slowdown in the rate of demand growth this year but shows manufacturers are still not reducing output. PMI readings elsewhere in Asia also showed signs of weaker demand, with Taiwan recording its lowest figure in almost three years and South Korea contracting for a third month in a row. However, India’s manufacturing sector picked up last month, with its PMI rising from 50.4 to 52.
Economists had forecast slightly higher readings in both China and the US. The Chinese figure suggests Beijing’s attempts to tighten credit, tackle inflation and cool growth are working.
Since the start of the year China has increased interest rates and reserve ratios for banks, and has employed administrative measures such as restrictions on housing purchases and telling banks which industries to lend to.
In the US, a 27th consecutive month of growth in manufacturing is a further reassuring sign that a summer filled with shocks over the euro zone and US public finances has not derailed the recovery. – (Copyright The Financial Times Limited 2011)
