Euro zone and U.S. manufacturing expand, China struggles

Tue Mar 24, 2015 11:53am EDT
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By Jonathan Cable and Caroline Valetkevitch

LONDON/NEW YORK (Reuters) - Euro zone businesses ramped up activity in March as the European Central Bank started printing money to spur economic growth, while a slowdown among Chinese factories fueled expectations of more monetary stimulus.

U.S. manufacturing growth also edged up despite a stronger U.S. dollar and the threat of an interest rate rise from the Federal Reserve later this year.

The Eurozone Composite Flash Purchasing Managers' Index (PMI) from data vendor Markit, based on surveys of thousands of companies and seen as a good growth indicator, jumped to a near- four-year high of 54.1 from February's 53.3.

The surveys pointed to first-quarter euro zone economic growth of 0.3 percent, Markit said, matching the previous three months' but shy of the 0.4 percent median forecast in a Reuters poll taken earlier this month. [ECILT/EU]

The ECB began its quantitative easing program to buy bonds worth more than a trillion euros in March.

"I wouldn't want to give QE too much credence at this stage. The ECB has only been buying for a couple of weeks and QE takes a long time to have any impact - if at all," said Peter Dixon at Commerzbank. "The outright QE itself has had zero impact; growth was already happening."

A sub-index measuring euro zone prices jumped to an eight-month high of 49.0. But it has spent three years below the break-even level of 50, suggesting inflation will not return any time soon.

Oil prices have tumbled over the past nine months and inflation rates across the world have followed suit.   Continued...

European Central Bank (ECB) President Mario Draghi (2nd R) arrives at a meeting of the European Parliament's Economic and Monetary Affairs Committee in Brussels March 23, 2015. REUTERS/Yves Herman