­­US factories defy slump in world output

Tim Wallace
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MANUFACTURING production plummeted in the Eurozone, UK and China in November, Markit’s purchasing managers’ indices (PMI) showed yesterday, yet US industry kept expanding.

Eurozone manufacturing PMI hit a 28-month low, with job losses in all 17 members of the currency bloc except Germany and Austria.

PMI fell to 46.4 from 47.1 in October. Any figure below 50 represents contraction in the sector.

Core and peripheral countries were affected, with PMIs of 47.3 in France, 43.8 in Spain and 40.9 in Greece.

“This is the first month since mid-2009 – the height of the credit crunch – that all countries saw output fall,” said Markit’s Chris Williamson.

“The survey is broadly consistent with manufacturing output falling at a quarterly rate of two per cent, and production is likely to be cut at an even faster rate in December.”

UK manufacturing declined for a second month in a row, falling to 47.6 from 47.8 in October.

Employment fell at its fastest rate for two years and Markit expects job losses to mount if orders keep dropping. China, too, saw manufacturing decline, with PMI hitting a 32-month low of 47.7 as both domestic and export demand slipped.

“Combined with a faster-than-expected easing in inflation, this sharp deterioration in business conditions implies that growth is set to overtake inflation as Beijing’s top policy concern,” said HSBC’s Hongbin Qu.

“This is likely to invite an across-the-board policy easing, which is likely to come as early as the year-end.”

Meanwhile the US continued to outstrip Europe. The Institute for Supply Management’s (ISM) manufacturing PMI jumped to a five-month high of 52.7, up from 50.8 in October.

Despite concerns over the state of the global and particularly European markets, the ISM believes manufacturers were “cautiously optimistic” about output over the coming months.

Although the employment index declined to 51.8 per cent from 53.5 per cent in August, it remains in positive territory. Car sales rose for the sixth consecutive month as consumers stayed confident, although initial jobless figures rose above 400,000, showing the recovery remains slow.