Global economy slows in March

The global economic picture has dimmed a little after recent data indicate that the United States economy may be losing momentum even as China's growth slows and the eurozone economy continues to languish.

In the US, the employment report last Friday was a big disappointment, with non-farm payrolls increasing by just 120,000 in March, well below the median projection of 205,000 in a Bloomberg survey and even below the lowest estimate. The March increase was also the smallest since October. The unemployment rate fell to 8.2 percent from 8.3 percent in February mainly due to people leaving the labour force.

The findings of the US purchasing managers surveys released last week had painted a mixed picture for March. The Institute for Supply Management's manufacturing PMI rose to 53.4 in March from 52.4 in February but the non-manufacturing index fell to 56.0 from 57.3.

China's economy had already been showing some uncharacteristic weakness in recent months and that trend may have continued in March as surveys of purchasing managers in the manufacturing sector provided contrasting results. The China Federation of Logistics and Purchasing's manufacturing PMI rose to 53.1 in March from 51.0 in February but HSBC's manufacturing PMI fell to 48.3 from 49.6. Furthermore, a decline in HSBC's services business activity index to 53.3 in March from 53.9 in February contributed to a fall in the composite output index to 49.9 last month from 51.8.

Meanwhile, the eurozone economy continues to be the laggard among major developed economies. Markit's composite output index for the region declined for the second consecutive month in March as it fell to 49.1 from 49.3 in February. The composite index was weighed down by the manufacturing index, which fell to 47.7 in March from 49.0 in February, more than offsetting a rise in the services index to 49.2 from 48.8.

The purchasing managers surveys corroborate the European Commission's business and consumer surveys a week earlier, which had also indicated weakness in the eurozone economy. The EC's economic sentiment indicator fell to 94.4 in March from 94.5 in February.

In contrast, recent economic reports from Japan have been positive. Markit's composite output index rose to 53.2 in March, a record high for the series, from 51.2 in February. The improvement was driven by an increase in Markit's services business activity index to 53.7 in March, the highest reading on record, from 51.2 in February. The Markit/JMMA manufacturing PMI rose to 51.1 from 50.5.

Other economic data from Japan last week were also positive. The index of coincident economic indicators rose to 93.7 in February from 92.7 in January while the index of leading economic indicators jumped to 96.6 from 94.5.