Second half of 2015 begins on shaky note

Fri Jul 24, 2015 12:32pm EDT
 
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By Wayne Cole, Hugh Lawson and Caroline Valetkevitch

LONDON/NEW YORK (Reuters) - The global economy started the second half of the year on shaky ground with China's factory sector activity contracting in July at the fastest pace in 15 months and euro zone manufacturing weaker than expected, although U.S. activity picked up.

The purchasing managers indices (PMI)for the manufacturing sector from private data vendor Markit come after Beijing said it would allow its yuan currency to fluctuate more widely within its trading band as a way to support trade and despite the European Central Bank's 60 billion euro a month bond-buying program.

CHINA PMI LOWEST SINCE APRIL 2014

The preliminary Caixin/Markit China PMI for July dropped to 48.2, the lowest reading since April last year. It was the fifth straight month under the 50 level separating expansion from contraction.

The fall confounded forecasts for a rise to 49.7 from June's final reading of 49.4 and pushed the Australian dollar to a six-year low AUD=D4. China is Australia's biggest export market.

Fears of faltering demand in China, the world's largest commodity buyer, put pressure on other commodity prices, with copper falling to its lowest level since 2009. [MKTS/GLOB]

The survey of executives in over 420 Chinese manufacturing firms found output, new orders and export orders all decreased.   Continued...

 
An employee works on a final assembly line for CRH380B, a high speed train model, at China CNR's Tangshan Railway Vehicle's factory in Tangshan, Hebei province, February 11, 2015. REUTERS/Kim Kyung-Hoon