Worldwide factory activity picks up in October

Fri Nov 1, 2013 1:13pm EDT
 
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By Herbert Lash, Natalie Thomas and Andy Bruce

NEW YORK/BEIJING (Reuters) - Manufacturing expanded around the world in October, with business surveys on Friday showing U.S. factory output growing at its fastest pace in 2-1/2 years and Asian manufacturers reporting the fastest upturn in months, led by China.

The latest batch of purchasing managers indexes (PMIs), which survey thousands of manufacturers worldwide, showed U.S. factory activity rising more than expected despite a partial U.S. government shutdown during the first 16 days of the month.

Manufacturing activity also picked up in Canada, where growth rose to its strongest level in two and a half years, while Brazilian manufacturers eked out their first gain in four months but Mexico's factories remained stagnant.

The PMIs point to a gradual improvement in global economic activity even though surveys from most major economies in Europe, including those for the euro zone, will be released next week because of a holiday. UK manufacturing sustained a solid rate of expansion.

The Institute for Supply Management (ISM) said its index of U.S. factory activity rose to 56.4 last month - its best showing since April 2011 - from 56.2 in September. Economists polled by Reuters had expected a reading of 55.

The news triggered selling in the U.S. Treasuries market, lifting yields. Along with Thursday's better-than-expected data from the Chicago region, the latest ISM report suggests U.S. manufacturing has maintained strength. If subsequent releases show momentum in the U.S. economy, the Federal Reserve could be motivated to reduce its monthly bond purchases sooner than March as currently anticipated.

October was the fifth consecutive month of quicker growth in the American goods-producing sector since it contracted in May. A reading above 50 indicates expansion.

"For the most part, this report continued to point to strength in the factory sector," said RBS analysts in a note about the U.S. figures. "It seems like the shutdown did little to dampen the underlying strength in manufacturing in October."   Continued...

 
An employee stands next to coils of steel inside a factory in Dalian, Liaoning province, October 18, 2013. REUTERS/China Daily