Europe, China factory sectors weaken in March; U.S. stable

Tue Apr 1, 2014 12:33pm EDT
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By David Gaffen, Jonathan Cable and Adam Rose

NEW YORK/LONDON/BEIJING (Reuters) - Manufacturing in Asia and Europe finished the first quarter on a weaker note but activity in the United States remained relatively steady, suggesting severe winter weather in North America had only a modest effect on U.S. factories.

Factories across Europe eased back on the throttle in March while China's vast manufacturing industry contracted for a third straight month, surveys showed, fueling expectations policymakers may be forced to act in coming months.

The performance in the U.S. contrasts with the lackluster data elsewhere and arguably gives U.S. monetary authorities more room to reduce stimulus than their central banking counterparts abroad, who are trying to prop up growth.

U.S. markets judged the news as positive. Stocks added to gains to push the S&P 500 to a new intraday record, and the dollar edged higher.

"It is consistent with an economy making progress but one growing between 2 and 2.5 percent," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

"That's respectable but not as much as the Fed would like."

The two U.S. surveys, one from Markit and one from the Institute for Supply Management, contradicted each other in spots, but both overall figures were solidly above 50, indicating ongoing growth.

The weak performance of China's massive manufacturing sector remains a primary concern for the global economy. The final Markit/HSBC PMI gauge of factory activity fell to an eight-month low of 48.0 in March, and has remained below the 50 level since January.   Continued...

An employee works at a Chinese automobile factory in Hefei, Anhui province, in this file picture taken March 15, 2014. REUTERS/Stringer/Files