Euro zone factory slump deepens, U.S., Asia perk up

Wed Jan 2, 2013 1:34pm EST
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By Jonathan Cable and Lucia Mutikani

WASHINGTON/LONDON (Reuters) - Manufacturing in the United States and China grew in December, suggesting the global economy was on course for moderate growth this year, even as the euro zone looked set to sink deeper into recession.

U.S. factory activity rebounded last month after stumbling to a 40-month low in November, with new export orders growing for the first time since May. That mirrored growth in Chinese manufacturing reported earlier this week.

The Institute for Supply Management said its index of U.S. manufacturing activity rose to 50.7 from 49.5 in November.

The improvement came despite concerns over a wave of sharp government spending cuts and high taxes, the so-called fiscal cliff, that would have sucked $600 billion from the U.S. economy and push it into recession.

In much of Europe, the mood was downbeat. Purchasing managers' surveys in the 17-nation euro zone showed economic decline among some of its biggest member countries.

Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) edged down to 46.1 in December from November's 46.2, below a preliminary reading of 46.3.

It has been below the 50 mark that divides growth from contraction since August 2011. <EUR/PMIM>

"The reports are consistent with an expanding global economy, but one which is doing so, at least on the manufacturing side, at a relatively slower pace," said Jay Bryson, global economist at Wells Fargo Securities in Charlotte, North Carolina.   Continued...

The blast furnace is seen in operation at the Sahaviriya Steel Industries (SSI) plant in Redcar, northern England April 18, 2012. REUTERS/Nigel Roddis