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August 31, 2011

Manufacturing Slows Across the Globe

New reports show that manufacturing slowed across much of the globe in August, fueling new fears of a worldwide economic downturn.

One survey Thursday showed that manufacturing in the United States, the world's biggest economy, advanced slightly last month, but at a slower pace than in July. Elsewhere, the story was much the same, or worse.

Manufacturing in the 17-nation European bloc that uses the euro currency contracted last month to its weakest point in two years. Britain's factory production dropped to its lowest level in 26 months. European economies are shrinking as governments reduce their spending in an effort to cut their deficits and avoid the need for more international financial bailouts like those already secured by Greece, Ireland and Portugal.

Manufacturing in China, with the second biggest global economy, remained near a 29-month low. An index of its exports, a bulwark of the Chinese economy, contracted for the first time since early 2009.

Factory production also dropped in South Korea, Taiwan and Australia.

Some financial analysts say that Asian economies may inevitably slow, because they are so dependent on selling their exports to Europe and the United States. As their economic fortunes wane, there will be less demand for Asian products.

Already, some companies are feeling the effect. South Korea's LG Display says demand for its flat-screen televisions has dropped, while China's Angang Steel says its profits have dropped sharply with less demand from automakers for its steel products.

In the United States, the Institute of Supply Management said manufacturers are concerned about international economic developments and that customers have been reluctant to place new orders. While U.S. manufacturing has not contracted, its pace has now declined for six straight months.

Some information for this report was provided by AP, AFP and Reuters.