Wednesday, 2 September 2009

US manufacturing joins the growth party

Based on Tuesday's economic reports, it certainly looks as though the US recession is at an end. From Bloomberg:

American manufacturing expanded for the first time in 19 months, and pending sales of existing homes rose more than forecast, indicating the worst recession since the 1930s has ended.

The Institute of Supply Management’s factory index posted its biggest two-month gain since 1983, rising to 52.9 in August; readings higher than 50 signal an expansion. The National Association of Realtors said signed purchase agreements for existing properties jumped 3.2 percent in July, for a record sixth consecutive gain...

Gains in homebuilding aren’t enough to prevent total spending on structures from dropping. The amount spent on construction projects fell 0.2 percent to a $958 billion annual pace in July, the Commerce Department reported today.

Meanwhile, Chinese manufacturing had already been growing for the past few months and the pace picked up further in August. AFP/CNA reports:

China's manufacturing activity expanded in August at its fastest pace in 16 months, two surveys released Tuesday showed, signalling the world's third largest economy is stabilising.

The Purchasing Managers Index, or PMI, published by the China Federation of Logistics and Purchasing, rose for a sixth consecutive month in August to 54.0, up from 53.3 in July.

The HSBC China Manufacturing PMI, an independent reading compiled by British research firm Markit Group Ltd. rose to 55.1 in August from 52.8 in July.

European manufacturing continued to shrink in August but at a slower pace than initially estimated. Bloomberg reports:

The European manufacturing industry’s contraction eased more than initially estimated in August, adding to evidence the region is emerging from the worst recession in six decades.

An index of euro-area manufacturing rose to 48.2 from 46.3 in July, Markit Economics said today. That was the highest in 14 months and exceeded the initial estimate of 47.9 on Aug. 21. The index is based on a survey of purchasing managers by London- based Markit and a reading below 50 indicates a contraction.

Nevertheless, the global recovery may be fragile, as it appears to be in the UK. From Reuters:

A surprise drop in manufacturing activity last month and a sharp fall in consumer lending in July cast doubt on Tuesday on the strength of any incipient economic recovery...

The headline PMI number dropped to 49.7 in August from a downwardly revised 50.2 in July, much worse than economists' expectations of a modest rise to 51.5...

Net consumer lending contracted by 635 million pounds in July compared to a 223 million pound rise in June and a 4.434 billion pound increase in July 2008, the biggest fall since records began in April 1993...

One bright spot, however, was a rise in approvals of new mortgages for house purchase to 50,123 in July from 47,891 in June -- the highest level since April 2008, and roughly in line with economists' expectations of 51,000.

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