GLOBAL ECONOMY-Asian factories, U.S. jobs show improvement

Thu Nov 1, 2012 10:49am EDT

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By Steven C. Johnson and Lucy Hornby
    NEW YORK/BEIJING, Nov 1 (Reuters) - Private U.S. firms
stepped up hiring last month and factories showed modest
improvement, surveys showed Thursday, while Asia's large
economies started to pick up after a year of slower growth.
    The jury was out on whether the data signalled sustained
improvement in the fragile global economy, though analysts said
strength in the United States and China, the world's two biggest
economies, was essential to overall economic well-being.
    That's particularly so at a time when a debt crisis in the
17-country euro zone has plunged several countries in the region
into recession. Reports on major euro zone countries are due on
Friday and expected to show continued economic contraction.
    But the picture appeared to be brightening elsewhere.
    U.S. companies added 158,000 jobs in October, data from
payrolls processor ADP showed on Thursday, far more than the
135,000 predicted in a Reuters poll. 
    Separate data showed the number of Americans filing for
first-time jobless benefits fell last week while U.S. consumer
confidence jumped to a four-year high. 
    In other reports, overall sales at major U.S. retail chain
stores, excluding at drugstores, rose 4.7 percent in Octoer,
compared with analysts' expectations for a 4.3 percent increase
at the 17 chains tracked by Thomson Reuters I/B/E/S.      
   But some U.S. retailers expect the massive storm that hit the
U.S. East Coast this week to hurt sales in November, while
overall holiday sales should still show the slow growth that was
forecast before Sandy hit. 
    The data was welcomed by the U.S. stock market, which rose
on the second day since it reopened following a massive storm
that battered the U.S. Northeast earlier this week.
    The data "are encouraging," said David Sloan, economist at
4Cast Ltd in New York. "There shouldn't be any distortions from
the hurricane yet. It seems with the ADP message there is some
evidence of labor market improvement. It is not totally
convincing yet but overall the message is positive."   
    The picture was more mixed among U.S. factories. The
Institute for Supply Management said the pace of growth picked
up slightly in the sector, with its index rising to a five-month
peak of 51.7. But the pace of hiring in the sector slowed.
     A separate report from data firm Markit showed the slowest
pace of growth in 37 months, the result of reduced demand for
U.S. goods overseas.
    "It looks like manufacturing has stopped deteriorating. It's
weak growth but it's growth," said Christopher Low, chief
economist at FTN Financial.
    In Brazil, manufacturing expanded for the first time since
March, according to the HSBC Purchasing Managers' Index,
boosting hopes for economic improvement in the fourth quarter.
 
    
    ASIAN REBOUND
    Data from Asia was encouraging as well. China's economy, the
motor of global growth in recent years, appears to have gathered
pace in October after slowing to its weakest pace in more than
three years in the third quarter.
    Chinese manufacturing showed renewed vim, with the official
manufacturing purchasing managers' index rising to 50.2 from
49.8 in September. Economists said that could help lift
fourth-quarter growth above the 7.4 percent rate recorded in the
July-to-September period.
    Also on Thursday, the final reading of the Chinese HSBC PMI
rose to 49.5 in October from 47.9 in September. The reading was
the highest since February.
    The official PMI generally paints a rosier picture of the
factory sector than the HSBC PMI as the official survey focuses
on big, state-owned firms, while the HSBC survey targets
smaller, private firms that have limited access to bank loans.
     "Overall sentiment is brightening and Chinese orders are
suggesting a moderate recovery," said Hirokazu Yuihama, a senior
strategist at Daiwa Securities in Tokyo.
    
    
    
    Beijing has been following a programme of pro-growth fine
tuning of economic policies for a year and analysts broadly
expect that to remain in place when a new leadership line-up at
the top of the ruling Communist Party is unveiled this month.
    "The return of the PMI above 50 suggests economic momentum
has indeed picked up. It indicates the effect of policy easing
may have been stronger than the consensus expected," Zhiwei
Zhang of Nomura said in a comment emailed to Reuters.
    "We believe macro data will continue to surprise on the
upside in coming months, as the government continues to ease
policy through the period of leadership transition."
    South Korea, another of Asia's manufacturing powerhouses,
posted the first annual rise in exports in four months in
October, adding to hopes for a turnaround after a year-long
slump in global trade. 
    Stronger demand from China and Europe led the small but
meaningful 1.2 percent gain in exports last month on an annual
basis, data from the Ministry of Knowledge Economy showed.
    There was less encouragement from South Korea's Markit/HSBC
PMI, which showed the country's manufacturing sector shrank in
October for a fifth consecutive month, although at a slower pace
than in September.
    Taiwan also saw a continued manufacturing contraction,
although the headline October reading from its HSBC PMI was the
highest in four months. 
    Monetary easing by the big developed world central banks has
helped push up the currencies of countries such as Korea and
Taiwan, hampering their export-led recoveries.
    India, hammered as much by internal politics as the global
downturn, also showed signs of a modest revival in
manufacturing. The HSBC manufacturing PMI, which gauges the
business activity of India's factories but not its utilities,
nudged up to 52.9 in October from 52.8 in September.
    The downturn in Britain's manufacturing sector, however, 
worsened in October as companies received fewer orders and costs
rose at a faster pace, reviving worries about the country's
fragile recovery.
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