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

Multimedia Obama Defends Immigration Action

Obama says with his executive action on immigration, enforcement resources will be focused on 'felons, not families; criminals, not children' More

US-Led Airstrikes in Syria Kill Over 900: Monitoring Group

British-based Syrian Observatory for Human Rights says the toll includes more than 50 civilians, five of them women and eight of them children More

Report: Obama Broadens US Combat Role in Afghanistan

The New York Times says resident Barack Obama has signed a classified order extending the role of US troops in Afghanistan for another year 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.
New Skateboard Defies Gravityi
X
November 21, 2014 5:07 AM
A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Mexico Protests Escalate Over Disappearances

Protests in Mexico over 43 students missing since September continue to escalate, reflecting growing anger among Mexicans about a political system they view as corrupt, and increasingly tainted by the drug trade. Mounting outrage over the disappearances is now focused on the government of President Enrique Pena Nieto, accused of not doing enough to end insecurity in the country. More from VOA's Victoria Macchi.
Video

Video US Senate Votes Down Controversial Oil Pipeline - For Now

The U.S. Senate has rejected construction of a controversial pipeline to transport Canadian oil to American refineries. The $5 billion project still could be approved next year, but it faces a possible veto by President Barack Obama. As VOA’s Michael Bowman reports, the pipeline has exposed deep divisions in Congress about America’s energy future.
Video

Video Can Minsk Cease-fire Agreement Hold?

Growing tensions between government troops and separatists in eastern Ukraine further threaten a cease-fire agreement reached two months ago in the Belarusian capital of Minsk. Critics of U.S. policy in Ukraine say it is time the Obama administration gives up on that much-violated cease-fire and moves toward a new deal with Russia. VOA's Scott Stearns has more.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.
Video

Video Ferguson Church Grapples with Race Relations

Many white residents of Ferguson, Missouri, say they chose to live there because of the American Midwest community's diversity. So, they were shocked when a white police officer killed an unarmed black teenager in August – and shaken by the resulting protests and violence. Some local churches are leading conversations on how to go forward. VOA’s Ayesha Tanzeem reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8050
JPY
USD
117.90
GBP
USD
0.6376
CAD
USD
1.1259
INR
USD
61.655

Rates may not be current.