Manufacturing accelerates in US and Europe

The week has started with another round of positive economic data.

In the US, Bloomberg reports that manufacturing expanded in January at the fastest pace since August 2004.

The Institute for Supply Management’s factory index rose to 58.4, exceeding the highest estimate in a Bloomberg News survey of economists, from December’s 54.9, figures from the Tempe, Arizona-based group showed. Readings greater than 50 signal expansion. A measure of factory employment rose to the highest level in almost four years.

The US consumer also appears to be holding up well.

Another report today showed personal spending rose 0.2 percent in December, the third straight gain, according to the Commerce Department in Washington.

Incomes climbed 0.4 percent, exceeding expectations and propelled in part by government payments, the report said. Wages and salaries rose 0.1 percent after a 0.4 percent gain in November, showing job growth is needed to help drive consumer spending in coming months.

It was not all positive though.

Construction spending declined in December more than anticipated, capping the worst year on record for the industry, separate Commerce Department figures showed. Outlays dropped 1.2 percent last month as homebuilding and commercial construction dropped.

Still, manufacturing strength was not restricted to the US. The euro area also saw manufacturing activity accelerate in January, according to another Bloomberg report.

An index of manufacturing in the 16-nation euro region increased to 52.4 from 51.6 in December, London-based Markit Economics said today. That’s the highest since January 2008 and above an initial estimate of 52 published on Jan. 21. The gauge is based on a survey of purchasing managers and a reading above 50 indicates expansion.

In the UK, the manufacturing PMI hit a 15-year high. Reuters reports:

... The CIPS/Markit manufacturing purchasing managers' index jumped to 56.7 last month from an upwardly revised 54.6 in December, its highest since October 1994 and well above analysts' forecasts for a reading of 54.0.

By one measure, manufacturing activity in China hit a record high in January. AFP/CNA reports:

The HSBC China Manufacturing PMI, or purchasing managers' index, rose to 57.4 last month from 56.1 in December, the highest since data were first collected in April 2004, the survey showed...

A separate official PMI published by the China Federation of Logistics and Purchasing on Monday showed manufacturing activity expanded for the 11th consecutive month to 55.8 in January, slightly slower than 56.6 in December.

However, a report last week showed that Japanese manufacturing slowed in January, the PMI falling to 52.5 from 53.8 in December.