Tuesday, 3 February 2009

Amid weak US economic data, manufacturing PMIs rise

The economic reports from the US on Monday were generally weak. Reuters reports:

U.S. factory activity contracted at a slower pace in January as credit markets improved, data showed on Monday, but the general picture remained one of an economy sliding deeper into recession.

While news that the Institute for Supply Management's index of national factory activity rose to 35.6 from a nearly three-decade low of 32.9 in December gave some faint hope for the embattled economy, other reports painted a bleak image...

According to a closely watched quarterly survey of lending conditions by the Fed, a majority of domestic and foreign banks tightened lending standards to businesses and households over the last three months...

Consumer spending fell by 1 percent in December, a sixth straight monthly decline, after dropping by 0.8 percent in November. With companies cutting down on hours and reducing payrolls, incomes fell by 0.2 percent after November's 0.4 percent decline.

On an inflation-adjusted basis, consumer spending fell 0.5 percent during the month...

In a separate report...spending on construction projects dropped 1.4 percent last month, the biggest decline since July. For 2008, construction spending plunged by a record 5.1 percent.

Elsewhere, the deceleration in the manufacturing contraction was evident in Europe as well. The Markit Eurozone Manufacturing purchasing managers' index rose to 34.4 in January from 33.9 in December while the UK PMI rose to 35.8 in January from December's 34.9

There was improvement in Asia too with the CLSA China Purchasing Managers’ Index rising to 42.2 in January from 41.2 in December, although the news in Asia was marred by South Korea reporting a record 32.8 percent fall in exports in January from a year earlier.

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