RPT-GLOBAL ECONOMY-Global factory growth picks up, U.S. hits 2-1/2-yr high

Mon Dec 2, 2013 12:14pm EST

Related Topics

* Global factory growth accelerates

* Euro zone PMIs highlight diverging economies

* British manufacturing growth near three-year high

* Asian factories expanding

By Jonathan Cable and Ryan Vlastelica

LONDON/NEW YORK, Dec 2 (Reuters) - Increased demand boosted global manufacturing activity last month as U.S. factories expanded at their fastest pace in 2-1/2 years and Chinese output suggested improvement in the world's second largest economy.

The 17-country euro zone's manufacturing sector also showed improvement in November, though some economies appeared to be holding up better than others.

Britain, which does not use the euro, reported its strongest factory growth in almost three years, while recent Japanese data revealed manufacturing grew at its fastest clip in more than seven years as export orders soared.

November marked the sixth straight month of faster growth in the U.S. goods producing sector, according to the Institute for Supply management's index of national factory activity, which at 57.3 hit its highest level since April of 2011.

A surge in new orders helped boost that index as well as a separate one from financial data firm Markit, which showed the quickest U.S. output growth in 20 months.

"This is all good news," said David Berson, chief economist at Nationwide Insurance. "Early in the expansion, manufacturing was a star. Now it's picking up again with housing slowing down. The new orders increase will show the strength will continue in the months to come."

Markit's Eurozone Manufacturing PMI rose to 51.6 last month from October's 51.3, a two-year high and the fifth consecutive month showing growth.

But growth in Europe's 17-nation currency union remains weak and Markit pointed to evidence of a renewed downturn in France and Spain, both of which saw their factory sectors shrink in November.

By contrast, data from Germany, Europe's biggest economy, showed factories there had their best month since mid-2011. Italian figures showed manufacturing there also picked up speed.

"Signs of weakness in France are clearly a worry and suggests that the divergence between it and Germany remain firmly in place. It would raise more concerns if it were to continue or intensify," said Ben May at Capital Economics.

The euro zone exited its longest-ever recession earlier this year, supported by better-than-expected growth in Germany, but a Reuters poll last month suggested the bloc's economy will grow only moderately though next year.

At 58.4, Britain's PMI for November easily topped expectations this month, marking the strongest growth in its factory sector in nearly three years.

Growth slowed a bit in Canadian manufacturing, retreating from October's 2-1/2-year high, but new orders remained strong, boding well for the future.

ASIAN UPSWING

Chinese PMIs suggested resilience that augurs well for Beijing's plans to gear the economy more towards domestic consumption and away from investment-led growth. Beijing has said it will accept lower economic growth to achieve the shift.

The HSBC/Markit China PMI edged down to 50.8 in November from a seven-month high of 50.9. China's official PMI released at the weekend, which focuses more on bigger firms, held at 51.4 in November, unchanged from October's 18-month high.

"The more forward-looking parts of the reports, however, imply some moderation of economic activity further down the road, underpinning our view that Chinese economic growth may have peaked in the third quarter," said Nikolaus Keis at UniCredit.

The HSBC survey showed new export orders growth dipped to a three-month low, but the official PMI showed an acceleration.

Japan's PMI, released on Friday, pointed to the quickest manufacturing growth in more than seven years as new export orders reached their highest level in over three years.

Prime Minister Shinzo Abe has overseen massive monetary and fiscal stimulus this year to revive the economy, which has now grown in the past four quarters.

Factory activity in India expanded after three months of contraction as new orders grew for the first time since May, supporting government figures on Friday that suggested an economic slump may have bottomed out.

But Brazil saw manufacturing activity drop slightly last month as the volume of new orders fell for a fifth straight month.

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