Weaker US manufacturing data takes shine off news from China and Europe

http://www.theguardian.com/business/2013/sep/23/weak-us-manufacturing-data-china-europe

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European and Chinese firms have reported strong factory orders in September, sending a strong signal that the global economy is healing. But weaker than expected US manufacturing activity hit stock market sentiment.

Financial data firm Markit said its "flash", or preliminary, US manufacturing purchasing managers index (PMI) retreated to 52.8 this month from 53.1 in August, confounding analysts' forecasts of an improvement. A reading above 50 indicates expansion.

The weaker PMI was widely seen as a signal that jobs growth in the sector had entered a slower phase, justifying the Federal Reserve's decision to maintain its stimulus to boost the economy – a move that had initially bolstered stock markets last week.

Output expanded at a faster pace while new order inflows slowed, suggesting "production growth is likely to weaken in the fourth quarter unless demand picks up again in October", said Chris Williamson, Markit's chief economist.

The Fed surprised markets last week by postponing a reduction of its $85bn-a-month bond-buying programme, while downgrading its growth forecasts.

Data showed the eurozone pulled out of recession in the second quarter. In France, the zone's second biggest economy, activity increased – albeit marginally – for the first time in 19 months.

Markit's Eurozone preliminary PMI measure jumped to 52.1 in September from last month's 51.5, its highest since June 2011 and beating expectations for a reading of 51.9.

New business increased this month, boding well for October activity, and it was a similar story in China, where new export orders jumped to a 10-month peak.

The Chinese flash HSBC PMI climbed to 51.2 this month from August's 50.1, hitting a high not seen since March.

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