* U.S. manufacturing jumps in Jan, ISM at 53.1, a 9-month
* China's official PMI eases to 50.4, HSBC reading at
* Euro zone PMI suggests worst may be over
* Economists still expect subdued global growth
By Steven C. Johnson and Jonathan Cable
NEW YORK/LONDON, Feb 1 U.S. manufacturing growth
quickened in January and hiring across the economy increased in
late 2012, while Chinese factories extended a modest rebound,
suggesting a global economic recovery remains on track.
The euro zone economy, meanwhile, likely contracted again at
the end of last year, though data on Friday suggested the worst
of the region's downturn may be over.
Surveys conducted by financial information firm Markit and
the Institute for Supply Management both showed U.S.
manufacturing grew in January at its fastest clip in nine
months, boosted by a surge in domestic demand.
That helped lift markets across the globe. U.S. stocks
climbed to five-year highs, with the Dow industrials hitting
14,000 for the first time since 2007, while European shares
gained and Japan's Nikkei capped off its longest winning streak
in 54 years, aided by a weaker yen.
The U.S. data "suggests the underlying health of the
industrial sector continues to improve and rising production
will help the economy return to growth in the first quarter,
providing there are no set-backs in coming months" said Markit
chief economist Chris Williamson.
On Thursday the U.S. government reported the economy
contracted in the fourth quarter for the first time since the
recession ended three years ago, although analysts said there
was no reason for panic because consumer spending and business
investment picked up..
Separate data showed U.S. employers added 157,000 jobs in
January and 127,000 more than initially reported in November and
December, suggesting the sluggish recovery remained on track.
"This shows that underneath the surface, the fourth-quarter
economy was really pretty good despite all the defense cuts. I
think the private sector is leading the way," said Jack Ablin,
chief investment officer at BMO Private Bank in Chicago.
Some analysts worried, however, that nearly $100 billion of
U.S. governemnt spending cuts set to take effect in March could
crimp U.S. economic growth unless Congress acts to delay them.
UNEVEN RECOVERY IN ASIA, EUROPE
The nature of the recovery on factory floors across Asia and
Europe was more uneven. Surveys showed growth slowed in India
and stalled in South Korea while Britain's expanded modestly.
Two separate versions of China's purchasing managers' index
(PMI) pointed to rising factory output in the world's
second-biggest economy but at very different speeds, suggesting
a bumpy recovery from China's worst downturn in 13 years.
China's official PMI released by the government eased to
50.4 from 50.6 in December, while a similar PMI from banking
group HSBC rose to a two-year high of 52.3.
Both showed export orders either grew marginally or shrank
as shoppers in the United States and Europe, the two biggest
buyers of Chinese goods, reduced spending.
Domestic demand, on the other hand, was the main force
behind China's gentle economic rebound.
"The general sense, if you look at what it is in the
pipeline, is that we will be getting a little bit more activity
in the months to come," said Peter Dixon, an economist at
Commerzbank. "The Chinese economy does appear to be gaining a
bit of traction but not a huge amount (and) the euro zone
numbers tell us the economy remains stuck in low gear."
Even so, signs of improvement in Chinese, European and
Japanese data suggested the global economy was "gradually"
improving, New York Federal Reserve President William Dudley
said on Friday.
WORST OVER FOR EUROPE?
Euro zone factories did post their best month in nearly a
year, thanks to an improved outlook in Germany. With the euro
zone PMI at an 11-month high of 47.9, some economists said the
worst of the downturn may be over.
Total output in the 17 countries that use the euro still
probably shrank by 0.4 percent in the final three months of
2012, which would be the third straight quarter of contraction,
according to a Reuters poll published last month.
"While still in contraction territory, the manufacturing
PMIs signal that upward momentum is spreading and the pace of
contraction in euro zone output is slowing," said Evelyn
Herrmann, European economist at BNP Paribas.
But she said the divergence in growth rates between core and
peripheral countries as well as between Germany and France
suggests recovery remains fragile.
Germany's PMI staged its biggest one-month jump since the
middle of 2009 to 49.8, while the PMI for France, Europe's
second-largest economy, sank to a four-month low of 42.9.
British manufacturing expanded modestly in January as output
grew at the fastest pace since September 2011, offering a small
boost to an economy flirting with recession.
Factories in Indonesia, the star emerging economy of the
past year, said business shrank in January from December for the
first time in eight months, while manufacturers in Taiwan
reported the fastest growth in 10 months.