Global economy loses steam as Chinese, European factories falter

Thu Oct 1, 2015 11:20am EDT
 
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By Sumanta Dey and Andy Bruce

BENGALURU/LONDON (Reuters) - World economic growth lost momentum in September, with China's factory output shrinking again, euro zone manufacturing growth slowing, and U.S. activity steady.

The latest business surveys across Asia, Europe and the Americas paint a gloomier picture and are likely to prompt more calls for central banks to loosen monetary policy even further.

"The data probably increases the case for more stimulus in certain parts of the world, especially from the People's Bank of China and the European Central Bank," said Philip Shaw, economist at Investec in London.

"Those economies that are at less advanced paths of the recovery cycle -- the key example is the euro zone, where we're looking at more disinflation -- may well find more stimulus is in order."

CHINA MANUFACTURING STILL CONTRACTING

Surveys of China's factory and services sectors showed the world's second largest economy may be cooling more rapidly than earlier thought, with deeper job cuts.

Taken together with a stock market crash in Shanghai during the summer and a surprise devaluation of the Chinese yuan, the data highlight just how difficult it will be for policymakers to steer China's economy out of the biggest slowdown in decades.   Continued...

 
An employee works at a Chinese automobile factory in Hefei, Anhui province, March 15, 2014.  REUTERS/Stringer