Global factory growth picks up but Europe diverging

Mon Dec 2, 2013 6:15am EST
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By Jonathan Cable and Aileen Wang

LONDON/BEIJING (Reuters) - Increasing demand for manufactured goods drove global factory activity higher last month but the spurt in the euro zone masked a widening disparity among some of the bloc's key members.

As year-end approaches, the global economy is showing signs of a more solid recovery, with encouraging signs from some economies, particularly Britain, of an acceleration.

But growth in Europe's 17-nation currency union remains weak and Markit, compiler of the monthly Purchasing Managers' Indexes, said on Monday that there was evidence of a renewed downturn in France and Spain.

Markit's Eurozone Manufacturing PMI rose to 51.6 last month from October's 51.3, a two-year high, just pipping an earlier flash reading of 51.5, and the fifth consecutive month showing growth. The output index nudged up to 53.1 from 52.9.

"It is coming from a pretty low level," said Ben May at Capital Economics. "Signs of weakness in France is clearly a worry and suggests that the divergence between it and Germany remain firmly in place. It would raise more concerns if it were to continue or intensify."

France's PMI fell to a five-month low of 48.4 from 49.1, chalking up its 21st month below 50, while Spain's sank back below the 50 break-even mark after spending the last three months in growth territory.

By contrast, data from Germany, Europe's biggest economy, showed factories there had their best month since mid-2011. Italian figures showed manufacturing there also picked up speed.

The euro zone escaped from its longest-ever recession earlier this year, supported by better-than-expected growth in Germany, but a Reuters poll last month suggested the bloc's economy will grow only moderately though next year.   Continued...

A worker operates a machine to cut a pipeline at a factory in Qingdao, Shandong province November 29, 2013. REUTERS/China Daily