Creaking euro zone, China sound warnings for global growth

Thu Nov 20, 2014 10:23am EST
 
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By Jonathan Cable, Jake Spring and Ryan Vlastelica

LONDON/BEIJING/NEW YORK (Reuters) - Surveys sounded warning bells for the global economy on Thursday as euro zone businesses grew less quickly than any forecaster expected, and China and U.S. factories lost momentum.

The downbeat data, alongside evidence of further price-cutting, will add to calls for more policy action from the European Central Bank, while the first drop in Chinese manufacturing output for six months will heap similar pressure on authorities in Beijing.

"It does reinforce the case for quantitative easing from the European Central Bank," said Alan Clarke, European economist at Scotiabank, of the euro zone PMIs.

Markit's Composite Flash Purchasing Managers' Index for November, based on surveys of thousands of companies and seen as a good growth indicator, fell to 51.4, missing even the lowest forecast in a Reuters poll.

The service industry PMI also undershot all forecasts by falling to 51.3, while the factory PMI's dip to 50.4 missed consensus. However, all three readings held above the 50 mark that separates growth from contraction.

Markit said the PMI pointed to 0.1-0.2 percent GDP growth in the euro zone in the current quarter, compared with the 0.2 percent forecast in a Reuters poll taken last week. EUGDPQ

"November's fall in the euro zone composite PMI is a serious blow to hopes that the recovery would resume toward the end of the year," said Jennifer McKeown, senior European economist at Capital Economics.

Forward-looking indicators suggest the situation is unlikely to improve anytime soon.   Continued...

 
A euro logo sculpture stands in front the headquarters of the European Central Bank (ECB) in Frankfurt October 26, 2014. REUTERS/Ralph Orlowski