Thursday 3 January 2008

US slowdown pulls down global manufacturing, Asian economies

Global manufacturing slowed in December with the US the chief culprit behind it. Reuters reports:

The JP Morgan Global Manufacturing PMI slipped to 51.4 in December from 52.2 in November. But while growth slowed, input prices faced by factories rose to a six-month high.

The global input prices index edged up to 67.2 in December from 67.0 the previous month, with inflation the fastest since June in the U.S.

Earlier on Wednesday the U.S. ISM Manufacturing index for December sank to its lowest level since April 2003 at 47.7 from 50.8, sending the dollar lower and U.S. Treasury debt prices up.

The ISM index indicates that US manufacturing shrank but not necessarily the US economy. The Singapore economy appears not to have been so lucky. From AFP/CNA:

Singapore's economy grew at a slower-than-expected 6.0 per cent in the fourth quarter...

On a quarter-on-quarter seasonally adjusted annualised basis, real GDP fell by 3.2 per cent in the quarter compared with a 4.4 per cent gain in the preceding quarter, reflecting a slowdown in the manufacturing sector, the ministry said.

In a further blow to the decoupling thesis, South Korean exports slowed in December. From Bloomberg yesterday:

South Korean exports expanded less than expected in December as a slowdown in demand from the U.S. and Japan tempered rising sales to China and the Middle East.

Overseas shipments advanced 15.5 percent to $33.2 billion from a year earlier, following a 17.1 percent increase in November, the Commerce Ministry said today in Gwacheon. That was lower than the median estimate of 20.2 percent, according to a Bloomberg News survey of five economists.

This is the latest sign Asia's export-dependent economies are at risk from a cooling global expansion, and follows figures today that showed Singapore's economy unexpectedly contracted last quarter. Finance Minister Kwon Okyu trimmed his 2008 economic-growth forecast, citing rising oil costs and fallout from the U.S. housing recession on the world's economies.

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