China, U.S. drag on global manufacturing revival
By Jonathan Cable and Steven C. Johnson
LONDON/NEW YORK (Reuters) - Slower growth in the Chinese and U.S. factory sectors raised worries about global growth on Monday, even though European manufacturers enjoyed a solid start to the year.
Data showed growth in China's manufacturing sector slowed to a six-month low, while its service sector grew at its slowest pace in five years.
That could increase worries that weaker growth in Asia's economic powerhouse could spell trouble for markets and the world economy. Worries about Chinese growth were factors behind the recent selloff in emerging market assets, as many countries depend on Chinese demand for exported goods.
U.S. manufacturing grew at a substantially slower pace last month as new order growth plunged the most in 33 years, although some economists said extremely cold winter weather was partly responsible.
"The data was very weak across the board. It's hard to find any good news in there. It looks like a general slowdown, though you don't know how much of this is weather related," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.
Markets were weak, with global equity indexes falling, driving investors to safe-haven assets like U.S. government debt. The U.S. stock market hit a low not reached since November.
Euro zone factories had their best month since mid-2011 and increased jobs for the first time in two years - a welcome sign for a region where unemployment remained at record highs.
The fall in the U.S. Institute for Supply Management's index of national factory activity to 51.3 - its lowest since May - was its second straight decline. But most economists continue to see the United States outpacing other developed countries in 2014. Continued...