Double dip in industry may be avoidable

Tim Wallace
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MANUFACTURING output has continued to expand in the US, China and India, purchasing managers’ indices out yesterday revealed, though the UK, Brazil, Taiwan and South Korea all registered declines in October.

Analysts believe a global manufacturing recession may be avoided.

International data from Markit, and US data from the Institute for Supply Management (ISM) is an early gauge of economic activity, based on survey responses. Any result above 50 indicates output expansion.

China moved from slight contraction into growth, rising from 49.9 to 51, whilst India’s growth accelerated from 50.4 to 52.

US manufacturing expanded, but at a slowing rate than in September, falling from 51.6 to 50.8.

Even this growth was described as “lacklustre” by analysts at Capital Economics. “The fall in the index was disappointing,” said economist Paul Dales. “For the past four months the index has been at almost exactly the same level, which is consistent with annual GDP growth of around two per cent.”

On the downside, UK manufacturing went into reverse, falling from 50.8 to 47.4.

Brazil continued its decline, but at a slower rate, up to 46.5 from 45.5.

Former Asian tigers South Korea and Taiwan also kept falling, at 48 and 43.7 respectively.

“At an aggregate global level, so far industrial confidence appears to be stabilising at a weak point consistent with industrial stagnation rather than recession,” said Julian Callow from Barclays Capital.

“This could be an early sign that a double dip recession in the manufacturing sector has been averted.”