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World Manufacturing Growth Slowest in Three Years

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The wheels of industry are grinding slowly these days. HYPERLINK “http://www.reuters.com/article/2012/11/01/us-usa-economy-pmi-markit-idUSBRE8A00RV20121101” Reports from a variety of sources indicate that worldwide manufacturing grew at the slowest rate in three years.

The U.S. Manufacturing Purchasing Managers Index (PMI), a leading indicator of manufacturing activity, dropped to 51.0 by the end of October, the lowest index mark since September, 2009. [L2] Analysts had forecast a 51.3 level. Readings higher than 50 reflect manufacturing growth.

Data for the PMI was obtained in a HYPERLINK “http://www.businessweek.com/printer/articles/198294?type=bloomberg” survey by the logistics federation and the National Bureau of Statistics of purchasing managers in more than 820 companies in 20 different industries.

Although manufacturing increased, European and Asian orders for U.S. manufactured goods fell again for a fifth month, continuing a downward trend. Declining orders were attributed to foreign economic problems.

Manufacturing colossus China also suffered a slowdown in production – the lowest since February, 2009 — posting a Purchasing Managers Index reading of 50.4 in October. A consensus of economists in a Bloomberg News survey had forecast a median increase of 51.8.

Heavy European debt, a major ongoing economic problem, has curtailed manufacturing activity, and consequently reduced exports to China.

Low PMI readings, “…is a reflection of slowing momentum in the economy,” said Wang Tao, an economist affiliated with UBS AG Bank, Hong Kong.

The outlook for world manufacturing in Q4 is not optimistic, according to analysts.
“Export and investment growth will continue to fall,” said Zhang Liqun, a senior researcher at China’s Development Research Center of the State Council.

Nevertheless, the U.S. economy took a small step up in the third quarter, posting a two percent rate of growth. The two percent rate is expected to hold through the end of the year after a feeble growth rate of 1.3 percent from April through June.

 

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