U.S. factories hit by shutdown, China production rises

Thu Oct 24, 2013 10:13am EDT
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By Steven C. Johnson and Jonathan Cable

NEW YORK/LONDON (Reuters) - Factories in China boosted production this month, but U.S. manufacturing output fell for the first time in four years while the euro zone economy lost momentum, surveys on Thursday showed.

The data suggested the world economy is still facing speed bumps as China tries to rebound from a slowdown and as growth in advanced economies remains fragile.

One such hurdle was a partial U.S. government shutdown that lasted for the first 16 days of October. This likely disrupted factory output in the world's largest economy and will probably end up slowing overall U.S. growth in the fourth quarter.

According to financial data firm Markit, U.S. factory output contracted in October for the first time since late 2009 and the overall pace of growth was the slowest in a year.

Markit chief economist Chris Williamson said the survey "suggests that the disruptions and uncertainty caused by the crisis hit companies hard," even if determining the precise impact of the shutdown remains difficult.

The shutdown, the first in 17 years, forced hundreds of thousands of federal employees to take unpaid leave.

Economists expect that put a brake on U.S. growth in the fourth quarter, which was expected to mark the transition to a stronger pace of expansion.

A Reuters poll of more than 70 economists last week forecast gross domestic product growth of 2.3 percent between October and December. The economy grew 2.5 percent in the third quarter.   Continued...

An European Union flag flutters in front of the Parthenon temple in Athens August 20, 2013. REUTERS/John Kolesidis