Growth Slows in United States and Europe, Reports Show
by Reuters
The outlook for the global economy became a little bleaker on Wednesday as reports of slower growth in the United States and Europe followed data from China that showed a worsening manufacturing downturn.
“There is substantial concern at present that global demand weakness is dampening the economy in the industrial countries,” said Jörg Krämer, chief economist at Commerzbank.
Last week, the global market volatility of the last month was high on a list of reasons the Federal Reserve did not raise an important interest rate, as many had expected, for the first time in almost a decade.
Growth in the manufacturing sector in the United States showed no month-over-month change in September, staying at August’s sluggish pace, according to an industry report released by the financial data company Markit on Wednesday.
Markit said its preliminary United States manufacturing purchasing managers’ index for September was 53. That was the same reading as in August, and the lowest figure since October 2013.
Job creation also slowed in September, with the index at 51.4, its weakest since July 2014, down from a final August reading of 52.4.
A strong dollar, flagging demand in many export markets and reduced capital spending by energy and other companies were dragging on manufacturing in the United States, according to Chris Williamson, chief economist at Markit.
“The survey is indicating the weakest manufacturing growth for almost two years, meaning the sector will have acted as a drag on the economy in the third quarter,” Mr. Williamson said.
Markit said signs were emerging that dwindling demand from Asia, led by China, was starting to hurt businesses in the eurozone.
Private business growth in the eurozone slowed in September, leading to fewer new jobs and forcing factories to reduce output. The Markit composite flash purchase managers’ index for the bloc came in at 53.9 in September, down from 54.3 last month. Markit said the index pointed to third-quarter growth of 0.4 percent.
“It is hard to see eurozone growth really kicking on,” said Howard Archer at IHS Global Insight. “There is the very real risk that slowing growth in emerging markets like China not only hits eurozone exports but also has a negative impact on business sentiment and leads to a scaling back of investment and employment plans.”
Business activity in Germany, the biggest economy in the eurozone, slowed slightly in September, while activity rebounded in France as manufacturing output returned to growth after two consecutive months of decline.
The preliminary Caixin/Markit purchasing managers’ index for China fell to 47.0, the worst since March 2009. It was the seventh straight month of contraction for the Chinese manufacturing sector.
The figures underline the malaise in China, the world’s second-largest economy behind the United States, and just how difficult it will be for policy makers to steer the economy out of the biggest downturn in decades.
Article published in NY Times on Sept. 23, 2015
