News / Economy

China, Japan Manufacturing Grows, Eurozone Falters

FILE - The construction site of the new headquarters of the European Central Bank (ECB) is seen from the observation deck of the "Maintower" in Frankfurt, April 25, 2014.
FILE - The construction site of the new headquarters of the European Central Bank (ECB) is seen from the observation deck of the "Maintower" in Frankfurt, April 25, 2014.
Reuters
— Manufacturing in China and Japan returned to growth in June after months of decline but an unexpectedly sharp fall in French business activity dragged on the wider eurozone, surveys showed on Monday.
 
Beijing's targeted stimulus measures and Japan's improving labor market supported domestic demand in Asia's dominant economies but the gap between the common currency area's big two remains wide.
 
Germany and France went their separate ways again, with German business activity expanding robustly, albeit at a slower pace than last month, while France's private sector shrank at the fastest rate in four months.
 
“The recovery has not gained as much traction as people had hoped. We've been highlighting the divergence between France and Germany for some time - it's not just in the PMIs. It's definitely a concern,” said Jessica Hinds at Capital Economics.
 
Surveys of companies

Markit's Composite Purchasing Managers' Index (PMI), based on surveys of thousands of companies across the 18 countries that use the euro and seen as a good indicator of growth, fell to 52.8 from May's 53.5.

That was well below the consensus for 53.5 in a Reuters survey, matching the lowest forecast polled.
 
Readings above 50 indicate expansion. Markit said that with a robust recovery taking place in some eurozone periphery countries, the data still point to second-quarter economic growth of 0.4 percent.
 
Germany, Europe's largest economy, was again the driving force although its composite PMI eased to 54.2 from 55.6.
 
But the French index slumped to 48.0 from 49.3, its lowest reading since February.
 
“DDejGa vu with the French numbers: worse than expected. Our own and the Banque de France's forecast of GDP expanding by 0.2 percent in Q2 looks optimistic now,” said Holger Sandte at Nordea.
 
Also somewhat worryingly for the European Central Bank, a composite PMI sub-index measuring output prices held below the 50 mark for the 27th month, coming in at 49.7 as firms kept cutting prices despite soaring input costs.
 
Inflation slowed to just 0.5 percent in May, prompting the ECB to cut interest rates to record lows and offer new long-term loans to banks to help boost lending to eurozone companies.
 
“The further weakening of the PMI vindicates the ECB's recent decision to implement further monetary easing and will keep fears of a Japanification of Europe firmly alive,” said Martin van Vliet at ING.
 
European stocks fell after the euro zone data in contrast with the upbeat numbers from China that earlier lifted Asian shares and the Australian dollar.
 
The stakes are high for China, which may need more stimulus to offset a cooling housing market and avoid a hard landing. Japan's weak exports also take the gloss off the government's efforts to breathe new life into its economic reform agenda.
 
The HSBC/Markit Flash China Manufacturing PMI rose more than expected to 50.8 in June from May's final reading of 49.4, beating a Reuters poll forecast of 49.7 and creeping above the 50-point level.
 
It was the first time since December that the PMI was in growth territory, and the highest reading since November, when it was also 50.8.
 
“The country's factory sector gained momentum again and offering new signs that overall economic growth is at least stabilizing thanks to the government's efforts to shore up growth,” said Nikolaus Keis at UniCredit.
 
Aid economic growth

China's government has unveiled a series of modest policy measures in recent months to give a lift to economic growth, which dipped to an 18-month low in the first quarter.

These include targeted reserve requirement cuts for some banks to encourage more lending, quicker fiscal spending and hastening construction of railways and public housing projects.
 
The Markit/JMMA flash Japan Manufacturing PMI rose to a seasonally adjusted 51.1 in June from a final reading of 49.9 in May, showing the first growth in three months.
 
Japan's new orders index jumped to 52.0 from 49.6, indicating consumers are shrugging off an increase in the nationwide sales tax on April 1 as strong demand for workers puts upward pressure on wages.
 
External demand, however, remained weak for the two export powerhouses in a worrying sign that the United States and Europe may not be recovering as strongly as anticipated, meaning it could be difficult to rely on exports for growth.
 
A flash PMI due later on Monday from the United States is expected to show a slight upturn from May.

You May Like

Diplomats Work to Extend Arab-Israeli Cease-Fire

Top officials from the US, France, Britain, Germany, Italy, Turkey and Qatar gather in Paris, while Israel security forces continue searching for tunnels used by militants and Gazan rescue workers search for bodies More

Photogallery US Defense Department Warns of Arms to Eastern Ukraine

‘Imminent’ delivery of Russian rocket launcher poses threat to civilians, US says More

Video Researchers: Africa Genetically Modified Crops Held Back by Scaremongering

GM crops offer best hope of increasing productivity and coping with climate change in Africa, according to co-author of Chatham House report More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Astronauts Train in Underwater Labi
X
George Putic
July 25, 2014 7:25 PM
In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.