China, euro zone and U.S. manufacturing suggest global economy still fragile

Mon Jan 4, 2016 11:37am EST
 
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By Sumanta Dey and Wayne Cole

BENGALURU/NEW YORK (Reuters) - The global economy finished last year on a fragile footing, with factory activity in China shrinking for the 10th month running in December, while euro zone manufacturing picked up but U.S. activity slowed.

Coming on a day of volatility in Asian stock markets after China's central bank fixed the yuan at a 4-1/2 year low, the data point to sluggish economic growth and inflation globally to start the new year.

Mainland Chinese shares sank over 7.0 percent on the lower yuan fixing and shrinking factory activity.

European stock markets fell too, though the declines were less sharp as investors took note of the brighter data from the euro zone. At midsession, U.S. stocks were down nearly 3.0 percent, the biggest one day fall in more than three months.

CHINA FACTORY ACTIVITY CONTRACTS

The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2, below a Reuters poll consensus of 49.0 and down from 48.6 in November.

That was the lowest since September and well below the 50-point level that separates contraction from expansion. It followed a fractional increase in the official PMI to 49.7.   Continued...

 
A building under construction is seen amidst smog on a polluted day in Shenyang, Liaoning province in this November 21, 2014 file photo. REUTERS/Jacky Chen/Files