GLOBAL ECONOMY-Manufacturing data stokes fears of global spring swoon

Tue Apr 23, 2013 10:13am EDT

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* German growth worries appear as G20 ponders easing up on
austerity
    * U.S. manufacturing activity slows to 6-month low
    * Export orders wilt in China and Germany

    By Steven C. Johnson and Andy Bruce
    NEW YORK/LONDON, April 23 (Reuters) - Major economies in
North America, Europe and Asia lost some momentum this month, a
clutch of business surveys showed on Tuesday, raising concerns
about the strength of the global recovery.
    China and Germany, the world's biggest exporters, both lost
momentum in April. Growth in Chinese factories slowed to a crawl
as export demand dwindled, while the euro zone's largest economy
saw business activity decline for the first time in five months.
    Growth in U.S. manufacturing was at its most sluggish in six
months as domestic demand dried up, suggesting the world's
biggest economy started to lose ground in the second quarter.
    The U.S. data "will obviously add significantly to concerns,
most recently related to the softer China and German data, that
another seasonal slowdown in the global economy is taking hold,"
said Alan Ruskin, Deutsche Bank's head of G10 currency strategy.
    Slower global growth and falling commodity prices are likely
to quash inflation fears and speculation that the Federal
Reserve will start tapering its $85 billion monthly asset
purchases any time soon. 
    The data comes as leaders from the world's biggest economies
have started edging away from a drive to revive economic growth
through large cuts to bloated government budget deficits, an
unpopular policy with voters that European Commission President
Jose Manuel Barroso said on Monday had reached its
limits. and 
    Governments in many the euro zone's peripheral countries
with high debt burdens and slow growth, have prescribed the
bitter medicine of steep budget cuts and higher taxes to shore
up public finances, but that has made it harder to grow and
unemployment has risen.
    April data showed even Germany, among the healthiest of
Europe's economies, was feeling the pinch. Financial data firm
Data vendor Markit said its preliminary services PMI for
Germany, measuring growth in companies ranging from hotels to
banks, fell to 49.2 in April from 50.9 the previous month. 
    The unexpected decline in German activity also adds a new
dimension to next week's European Central Bank policy meeting.
    "With Germany unable to offset the austerity and credit
crunch drag on growth in the (weaker euro zone states), and with
excess capacity growing and business expectations falling, the
only question is why the European Central Bank has not cut rates
already," said Lena Komileva, director of G+ Economics.
    The survey was worse than even the most pessimistic forecast
in a Reuters poll of economists.
    "Whereas we'd seen evidence that the economy had bounced
back quite nicely in the first quarter ... there are suggestions
that we could see a renewed downturn in the second quarter,"
said Chris Williamson, chief economist at compiler Markit.    
    France though might have passed the nadir of its own
economic troubles, the PMIs suggested, which helped the broader
euro zone composite survey hold steady in April at 46.5.
    But while on one hand showing the euro zone's recession is
not worsening, the dire tone of the German PMIs means that might
not be the case in the coming months.
    "It is statistically neutral, but not in economics terms,"
said Komileva at G+ Economics of the euro zone PMIs. 
    The U.S. economy may be facing a similar loss of momentum.
While the government is expected to report first-quarter gross
domestic product growth of around 3.0 percent on Friday, the
manufacturing slump in April suggests "the picture looks to have
already began to darken again, with growth set to weaken in the
second quarter," Williamson said
    Williamson chalked up some of the decline in Markit's
preliminary U.S. PMI to 52.0 from 54.6 in March to the impact of
higher taxes and spending cuts by households, businesses and
government. 
     
    
    EXPORTS WILT
    The International Monetary Fund cut its global growth
forecast to 3.3 percent this month, on par with 3.2 percent
growth seen in 2012.
    Worries about sluggish global growth were illustrated by
purchasing managers indexes from Asia. 
    The flash HSBC Purchasing Managers' Index for China in April
fell to 50.5 in April from 51.6 in March but was still stronger
than February's reading of 50.4.
    The figures followed an unexpected contraction in export
orders in March to Taiwan, one of the region's biggest providers
of technology gadgets, signalling that Asia's trade-reliant
economies may be losing further momentum.
    "This release was more in line with the official PMI
headlines in previous months, painting a picture of a painfully
slow recovery in China's manufacturing sector," said Societe
Generale economist Wei Yao in Hong Kong.
    He said the official PMI, due on May 1, might provide more
clues on how the second quarter is shaping up for China.
    At least there might be better times ahead for its emerging
market peer India, whose finance minister on Tuesday said the
country's worst slowdown in a decade has bottomed out.
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