U.S. manufacturing surges, Chinese recovery more modest
By Steven C. Johnson and Jonathan Cable
NEW YORK/LONDON (Reuters) - U.S. manufacturing growth quickened in January and hiring across the economy increased in late 2012, but Chinese factories only managed a slight rebound as the new year began, suggesting that world economic growth remains sluggish.
The euro zone economy, meanwhile, likely contracted again at the end of last year, though surveys on Friday suggested the worst of the region's downturn may be over.
Surveys conducted by the financial information firm Markit and the Institute for Supply Management both showed U.S. manufacturing grew in January at its fastest clip in nine months, boosted by a surge in domestic demand.
The data "suggests the underlying health of the industrial sector continues to improve and rising production will help the economy return to growth in the first quarter, providing there are no set-backs in coming months" said Markit chief economist Chris Williamson.
On Thursday the U.S. government reported the economy contracted in the fourth quarter for the first time since the recession ended three years ago, although analysts said there was no reason for panic because consumer spending and business investment picked up.
Separate data showed U.S. employers added 157,000 jobs in January and 127,000 more than initially reported in November and December, suggesting the sluggish recovery remained on track.
"This shows that underneath the surface, the fourth-quarter economy was really pretty good despite all the defense cuts. I think the private sector is leading the way," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
U.S. and European stocks moved higher after the data, with the benchmark U.S. S&P 500 stock index coming off its best monthly performance since October of 2011. .N .EU Continued...