Chinese factories rise but U.S. manufacturing slows

NEW YORK/BEIJING Mon Apr 1, 2013 11:52am EDT

A worker walks past Chinese trucks for exporting at a port of Liangyungang, Jiangsu province, March 31, 2013. China's official manufacturing purchasing managers' index (PMI) released by the National Bureau of Statistics rose to an 11-month high of 50.9 in March, above the 50-point level that indicates growth on the month. Picture taken March 31, 2013. REUTERS/China Daily

A worker walks past Chinese trucks for exporting at a port of Liangyungang, Jiangsu province, March 31, 2013. China's official manufacturing purchasing managers' index (PMI) released by the National Bureau of Statistics rose to an 11-month high of 50.9 in March, above the 50-point level that indicates growth on the month. Picture taken March 31, 2013.

Credit: Reuters/China Daily

NEW YORK/BEIJING (Reuters) - Strong demand at home boosted activity at Chinese factories last month, but U.S. manufacturing hit an unexpected speed bump after expanding rapidly in February, weakened by a slower pace of new orders.

Other surveys released on Monday showed manufacturing sectors in South Korea and Japan growing as exports increased, while Brazil faced sharply slower output and rapidly rising prices, suggesting a manufacturing recovery remained tenuous.

Most European markets were closed on Monday for Easter.

For the United States and China, last month was largely a story of domestic demand. The U.S. Institute for Supply Management's factory purchasing managers index showed new orders slowed sharply in March, a month after rising demand boosted the index to its highest level since mid-2011.

"This comes as a disappointment," said Tom Porcelli, chief U.S. economist at RBC Capital Markets, who noted that recent strong consumer income and spending data last week had suggested the broader economy would grow strongly in the first quarter.

"What this support suggests is that the quarter probably ended with a loss of momentum," he said, adding RBC expects the economy to have grown by 3.2 percent at an annualized rate between January and March after expanding 0.4 percent in the fourth quarter of 2012.

"The biggest concern was the drop in new orders," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee. "Maybe we are seeing a cutback in business spending. We could see a slowdown in the spring."

However, a separate gauge of U.S. manufacturing from financial information firm Markit showed the first quarter was the sector's best in two years and should contribute to overall first-quarter growth.

While the two surveys use the same sub-indexes, they give different weights to the components.

New orders at Chinese factories, meanwhile, rose sharply, though an uncertain outlook for exports could still slow the speed of economic recovery there. So, too, economists say, could premature tightening of China's current loose monetary policy.

The central bank eased conditions last year, thereby increasing credit and helping avert a more pronounced slowdown in the world's second largest economy.

"Growth momentum has been stabilizing, but headwinds remain," Liu Li Gang and Zhou Hao, economists at ANZ, said in a note to clients. "The current economic rebound remains fragile, and could falter with tightened monetary policy conditions."

China's official manufacturing purchasing managers' index (PMI) released by the National Bureau of Statistics rose to an 11-month high of 50.9 in March. A separate survey by HSBC showed its final PMI climbing to 51.6 last month, in line with a flash reading of 51.7 and up from February's 50.4.

The rebound in China's PMIs in March comes after a choppy start to the year.

The official PMI in February fell to within a whisker of the 50-point mark that separates accelerating growth from contraction in China's giant factory sector. But investors mostly saw February's weak reading as a consequence of the Lunar New Year, as many Chinese factories closed for at least two weeks.

Most analysts expect China's economy to enjoy a steady but gentle recovery this year, driven internally by infrastructure investment and household consumption after growth struck 13-year lows in 2012 due to crumbling demand for Chinese exports.

ASIA, BRAZIL

Elsewhere in Asia, exports helped South Korean manufacturing grow at its fastest rate in a year, suggesting the beginning of a recovery.

A Markit/JMMA survey for Japan, released on Friday, showed manufacturing activity grew for the first time in 10 months, a sign that the Japanese economy was gaining momentum as a weaker yen was helping exporters.

The story in South Asia was gloomier, with slower domestic and overseas demand slowing India's manufacturing sector growth to its slowest pace since November 2011.

Brazil, another large developing economy, also saw manufacturing output slow sharply last month even as input prices rose at the fastest pace in 22 months and average selling prices jumped for a 13th consecutive month.

The decline to 51.8 in the HSBC Purchasing Managers' Index from 52.5 in February suggests the sector continues to lose steam after growing more than expected in the first month of 2013.

"The PMI survey suggests that economic activity in the manufacturing sector lost momentum after a very strong January," said Andre Loes, chief Brazil economist at HSBC. "On the other hand, the average reading for the first quarter of the year was ... the strongest since the first quarter of 2011. These results seem consistent with our view that the Brazilian economy is experiencing a moderate recovery in 2013."

(Additional reporting by Richard Leong; Editing by Kenneth Barry)

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Comments (4)
bobber1956 wrote:
About three hours ago reuters posted this article on the internet.

“U.S. manufacturing growth picked up in March as new orders increased and hiring quickened” Check out the comment, it is not just me…it is quite obvious!

http://www.reuters.com/article/2013/04/01/us-usa-economy-pmi-markit-idUSBRE93008G20130401

And now this article:

“Chinese factories rise but U.S. manufacturing slows”

“The U.S. Institute for Supply Management’s factory purchasing managers index showed new orders slowed sharply in March”

reuters you have gone beyond irresponsible, and sleazy. You are now criminal-clearly, intentionally falsifying reports and events for some kind of political agenda beyond my imagination. I find it hard to believe even obama and his band of liberal liars could even approve of these “journalistic” practices…and then again.

DISGUSTING!

Apr 01, 2013 12:47pm EDT  --  Report as abuse
billybob244 wrote:
its not a conspiracy, one hand just does not know what the other is doing.

therre is nothing nothing nothing made in the US, why would you think the US has any manufacturing???

the ONLY manufaturing we do is for DOD, once that cut that it will truly be the end of manufacturing in the US.

Apr 01, 2013 1:48pm EDT  --  Report as abuse
MikeBarnett wrote:
China has worked since 2011 to stimulate internal demand. It increased the minimum tax deduction by 75%, reinstated old age pensions, and began construction of 46 million low cost housing units enough for 138 million Chinese or 10% or the population. China controls fuel prices because they impact the costs of all goods. Chinese banks have lowered bank reserves to encourage small business lending. Infrastructure projects to develop the north and west have created millions of workers with paychecks who become customers and taxpayers. The projects create more infrastructure than needed at present, but it allows entreprenuers to set up production lines in 2 months when the same production lines in the US would take 6 months to 2 years. In addition, 480 million Chinese will move from rural areas to cities, so the infrastructure will be needed, and it must be built before it can be used.

Apr 01, 2013 4:54pm EDT  --  Report as abuse
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