Factory activity growth slows in Asia, Europe and U.S. in November

Mon Dec 1, 2014 11:44am EST
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By Jonathan Cable, Wayne Cole and Sam Forgione

LONDON/SYDNEY/NEW YORK (Reuters) - Manufacturing growth across Asia, Europe and the Americas eased in November as heavy price cutting failed to revive demand, surveys showed on Monday, providing more evidence that a feeble global economic recovery may be grinding to a halt.

Worryingly for policymakers at the European Central Bank, who are struggling to bolster growth and drive up dangerously low inflation, factory activity declined in the euro zone's three biggest economies: Germany, France and Italy.

"The concern is the ongoing lack of any real growth in the euro zone. We are dealing with very low price pressures, and when that comes with weak growth, like in the euro zone, it raises concerns," TD Securities head of global strategy, Richard Kelly, said.

Data vendor Markit said its final November manufacturing Purchasing Managers' Index (PMI) for the euro zone was 50.1, its lowest reading since June 2013, despite price cutting made possible by tumbling input costs.

That is barely above the 50 mark that separates growth from contraction and, in a sign that there is little prospect of improvement in December, new orders declined for a third month.

The growth slowdown comes despite factories cutting prices at the fastest pace since mid-2013 although neither factor will likely push the ECB into loosening monetary policy further when it meets on Thursday, according to a Reuters poll. [ECB/INT]

Annual euro zone inflation fell to 0.3 percent in November, firmly in the ECB's deflation "danger zone", and as oil prices sank to its lowest in over five years on Monday with the industrial bellwether copper not far behind, there are few reasons to expect any meaningful pick-up.

Both U.S. crude oil and Brent have now fallen for five straight months, the longest losing streak since the 2008 financial crisis and the rout has spread to gold and silver prices while the U.S. dollar rose to seven-year peaks against the yen.   Continued...

A worker uses the tapping process to separate nickel ore from other elements at the nickel processing plant owned by  PT Vale Indonesia,Tbk in Sorowako of Indonesia's South Sulawesi Province March 1, 2012. REUTERS/Yusuf Ahmad