Tuesday, 2 March 2010

Manufacturing expands in February

Data out on Monday show that manufacturing continues to drive the global economic recovery.

Bloomberg reports the latest US ISM and other economic numbers.

Manufacturers increased production and employment in February, signaling factories are leading the nation out of recession as the new year begins.

The Institute for Supply Management’s factory index fell to 56.5 from January’s 58.4, which was a five-year high, figures from the Tempe, Arizona-based group showed. The measure exceeded 50, signaling expansion, for a seventh straight month. The group’s jobs gauge rose to the highest level since January 2005...

Consumer spending, which accounts for about 70 percent of the economy, rose 0.5 percent in January, the fourth straight gain, figures from the Commerce Department showed...

Incomes rose 0.1 percent, the report also showed, less than anticipated and restrained by declines in interest and dividend payments. Wages and salaries climbed 0.4 percent, the most since April...

A third report today showed construction spending fell in January for a third straight month, led by declines in commercial projects.

The 0.6 percent decrease followed a 1.2 percent drop the previous month, Commerce Department figures showed. Commercial building fell 1.4 percent, swamping a 1.1 percent gain in home construction.

Manufacturing accelerated in the euro area. Bloomberg reports:

European manufacturing accelerated to the fastest pace in more than two years in February as reviving global demand boosted export orders.

A manufacturing index for the 16-member euro region increased to 54.2 from 52.4 in January, London-based Markit Economics said today. That’s above an initial estimate of 54.1 published on Feb. 19 and the highest since August 2007. Manufacturing accounts for about a quarter of the economy and a reading above 50 indicates expansion...

European companies may have to rely on emerging economies to bolster sales as rising unemployment and surging energy costs crimp domestic demand. Europe’s jobless rate remained at 9.9 percent in January from the previous month, the European Union statistics office in Luxembourg said today. That’s the highest in more than 11 years.

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

The manufacturing sector expanded faster than expected in February, matching the previous month's 15-year high rate of growth and suggesting the economic recovery may be gathering pace, figures showed on Monday.

The CIPS/Markit manufacturing purchasing managers' index held at 56.6 last month, the same level as January, which was the strongest since October 1994. The index has now held above the 50.O mark, separating expansion from contraction, for five months.

China, however, showed falls in PMI numbers. Bloomberg reports:

China’s manufacturing grew at a slower pace in February, reducing the risk of overheating in the fastest-growing major economy.

A Purchasing Managers’ Index released by the government today slid to a one-year low. Another PMI, from HSBC Holdings Plc and Markit Economics, showed the weakest expansion in three months. A weeklong Chinese holiday last month may have affected the numbers...

Overall, the government’s index fell to a seasonally adjusted 52, the Federation of Logistics and Purchasing said today in an e-mailed statement in Beijing. That was less than 55.8 in January and the median 55.2 estimate in a Bloomberg survey of 15 economists. HSBC’s PMI declined to 55.8 from 57.4.

Last week, Japan had released an unchanged manufacturing PMI. From Reuters:

Japanese manufacturing activity was unchanged in February from the previous month in a sign that a rapid recovery in the sector is levelling off, a survey showed on Friday.

The Nomura/JMMA Japan Manufacturing Purchasing Managers Index (PMI) was 52.5 in February on a seasonally adjusted basis, unchanged from January.

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