* Euro zone manufacturing growth fastest since June 11
* Chinese factory activity up for first time in 4 months
* PMIs suggest global recovery on track, but fractured
By Jonathan Cable and Koh Gui Qing
LONDON/BEIJING, Sept 2 European factories
experienced robust growth in August and China bounced back on
rising demand, lifting prospects for broad-based recovery on the
back of the U.S. revival.
India, at the epicentre of current emerging market turmoil,
saw its manufacturing activity shrink for the first time in
4-1/2 years, however. Lacklustre performances in France and in
some other Asian manufacturers also highlighted the fragility of
The U.S. Institute of Supply Management is set to publish
its bellwether PMI for U.S. factories on Tuesday. A Reuters poll
showed the index is expected to slip to 54 from July's 55.4.
The data comes as markets are bracing for the U.S. Federal
Reserve to begin winding down its huge bond-buying programme,
itself a signal the central bank of the world's largest economy
thinks the recovery is on track.
That prospect, however, is causing concern in some of the
emerging economies that have most benefitted from the U.S.
"The bag is getting more full with better numbers. The
pick-up in the Chinese PMI is helpful, that was the one that was
worrying, that's the big one in terms of sentiment, with a bit
of help from the European numbers," said Victoria Clarke at
Factory activity in the euro zone rose at its fastest pace
in over two years while China's manufacturing sector grew in
August for the first time in four months, according to business
surveys published on Monday.
Markit's Eurozone Manufacturing Purchasing Managers' Index
(PMI) jumped to 51.4 from 50.3 in July - the first month the
index had been above the 50 line that signifies expansion since
The reading pipped an earlier preliminary figure of 51.3.
But while those surveys showed the euro zone zone's nascent
recovery may be taking hold, activity in France - the bloc's
second biggest economy - declined for the 18th month.
"In the end France should be dragged by the rest of the euro
area but it certainly seems to be lagging. It's not a major
worry but we would expect it to follow suit," Clarke said.
Highlighting the fragility of the recovery, the PMI showed
European manufacturers reduced headcount for the 19th month in
August and at a sharper rate than in July.
Outside the currency bloc the news was better - British
manufacturing accelerated again in August and new orders and
output rose at their fastest pace in nearly 20 years, boosting
hopes that the country's own recovery is broadening.
Chinese factories expanded for the first time in four
months. Data on Friday, meanwhile, showed Japanese manufacturers
also posted stronger growth. A PMI survey showed activity grew
in August for the sixth consecutive month.
In South Korea, Monday's local PMI edged up but held well
under the 50-mark although other heavyweight Asian electronic
makers such as Taiwan fared better.
The final Markit/HSBC China PMI climbed to 50.1 for August
and a similar official survey released on Sunday showed sector
growth hit a 16-month high last month.
The two reports stirred hopes that the world's
second-largest economy may finally be steadying after slowing
down in 12 of the past 14 quarters, cheering Asian investors who
pushed regional stock markets to a two-week high.
"We are definitely stabilising, but it's going to be a
pretty weak to flat recovery," said Stephen Green, an economist
at Standard Chartered, referring to China's vast factory sector.
But relief that China may have dodged a sharp slowdown was
moderated by investor apprehension that times remain tough,
especially as other Asian factories foundered, especially in
India, Asia's third-largest economy.
Government data on Friday showed India's economic growth in
the April-to-June quarter slowed to 4.4 percent, the weakest
pace since 2009, as both mining and manufacturing shrank.
Indian economic growth has nearly halved in the last two
years to a decade-low rate of 5 percent in the fiscal year that
ended in March, and a majority of the economists surveyed by
Reuters last week expect this year to be worse.
Weighed down by a record current account deficit, the Indian
rupee has lost around a fifth of its value since the U.S. Fed
hinted in May it was going to start paring back its stimulus,
sparking capital outflows from many emerging markets.