China manufacturing contracts, euro zone and U.S. slows

Tue Sep 1, 2015 4:07pm EDT
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By Jonathan Cable

LONDON (Reuters) - China's giant manufacturing industry contracted and euro zone and U.S. growth eased in August in data published on Tuesday, while the International Monetary Fund cut its forecast for world growth this year.

Stocks on major markets tumbled along with commodity prices following the data, with markets still trying to gauge the likelihood of a September interest rate hike by the Federal Reserve.

"It's all consistent with a global economy which clearly is struggling to make any significant headway," said economist Peter Dixon at Commerzbank.

"As a consequence central banks which are thinking about raising interest rates in the near future will be looking at these numbers and it will maybe give them a little pause for thought."

Global factory activity expanded at its weakest pace since July 2013 in August, with JPMorgan's Global Manufacturing Purchasing Managers' Index, produced with Markit, sinking to 50.7 from 51.0 in July.

August was the 33rd straight month the index has been above the 50 level that separates growth from contraction. The global PMI indicator combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia.

"The August PMI surveys suggest that conditions in the global manufacturing sector remain relatively lacklustre, with growth staying stubbornly below its long-run trend," said David Hensley, a director at JPMorgan.

Global economic growth is likely to be weaker than earlier expected, the head of the IMF said on Tuesday, due to a slower recovery in advanced economies and a further slowdown in emerging nations.   Continued...

An employee works on an assembly line producing Mercedes-Benz cars at a factory of Beijing Benz Automotive Co. (BBAC) in Beijing, China, August 31, 2015.  REUTERS/Kim Kyung-Hoon