Global factories struggle as growth fears rise
By Steven C. Johnson and Jonathan Cable
NEW YORK/LONDON (Reuters) - U.S. and euro zone manufacturing struggled again in July while factory activity in China hit an eight-month low, surveys showed on Wednesday, as economies worldwide appeared to lose momentum.
Economic malaise was worst in the 17-country euro zone, where output plummeted and the manufacturing sector contracted for an 11th straight month as a downturn that began in smaller countries continued to spread into core euro area economies.
The slump worsened in Italy, Spain and Greece as well as the region's two biggest economies -- Germany and France.
Europe's economic woes also depressed export orders in China and India, while U.S. manufacturing contracted for a second consecutive month, according to the Institute for Supply Management's index of national factory activity.
"The manufacturing numbers are pretty dismal. There's really no good way to read them," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "I think they bolster the case for more Federal Reserve action, and globally the argument is pretty much the same."
The timing of such action was unclear, however. The Fed on Wednesday acknowledged the economy had weakened but did not offer any new measures, disappointing markets.
"It was very status quo at a time when people are saying the economy is getting worse," said Nicholas Colas, chief market strategist at The Convergex Group in New York.
Markets expect the European Central Bank to act as soon as Thursday, possibly with a round of government bond purchases, though insiders have told Reuters that bold policy action could be weeks away. Continued...