U.S., euro zone business growth slower, China contracts

Thu May 21, 2015 5:47pm EDT
 
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By Jonathan Cable and Michael Connor

LONDON/NEW YORK (Reuters) - U.S. and euro zone business growth slowed in May while China's factory sector contracted again, reinforcing the need for major central banks to continue supporting economic growth.

The U.S. Federal Reserve is seen unlikely to tighten monetary policy in June since the world's biggest economy barely grew at the start of the year.

Growth in euro zone business activity also weakened in May, just two months after the European Central Bank launched a 1-trillion-euro stimulus program, and an absence of inflation pressures suggested Asian authorities could inject more stimulus if needed.

"The May (Purchasing Managers' Index) surveys were broadly disappointing although nothing terribly bad," said Richard Kelly, head of global strategy at TD Securities.

"There is no question the ECB is going to continue with quantitative easing up until September 2016. China is just starting the amount of additional liquidity and stimulus that will be needed to safely rebalance the economy," he said.

U.S. FACTORY GROWTH SLOWS FOR SECOND MONTH

Growth in the U.S. manufacturing sector slowed for a second straight month during May, with new orders rising at their slowest pace since January 2014, private data vendor Markit said on Thursday.   Continued...

 
An employee welds the exterior of a vehicle along a production line at a factory in Qingdao, Shandong province December 1, 2014. REUTERS/China Daily