* Divergence between Germany and France widens
* U.S. business expansion slows in December
* China PMI report shows slowest growth in 3 months
* Euro zone PMIs point to Q4 growth of 0.2 pct
* Better growth reassuring in euro zone, but recovery lopsided -Markit
By Jonathan Cable and Daniel Bases
LONDON/NEW YORK, Dec 16 (Reuters) - Global manufacturing and business activity expanded in December, as euro zone businesses ended the year on a high thanks to a surge in new orders, though the rate of manufacturing growth slowed in the United States and China.
U.S. manufacturing activity growth dipped a bit in December from a 10-month high, according to Markit, though other U.S. figures released Monday, including data on industrial production, pointed to increased strength in the world’s largest economy.
Markit’s Flash Eurozone Composite Purchasing Managers’ Index (PMI) readings, which gauges business activity across thousands of companies, rose to 52.1 in December from 51.7 in November but showed a widening chasm between a resurgent Germany and a wilting France.
A PMI reading above 50 indicates expansion.
“This recovery, certainly here in the U.S. but to some degree globally, has been a bit spotty. Never quite up to speed to what we want to see and at times halting stop and start,” said Stephen Stanley, chief economist at Pierpont Securities, Stamford, Connecticut.
In the United States, Markit said its preliminary December manufacturing PMI reading dipped to 54.4 from a 10-month high of 54.7 in November. Economists polled by Reuters had expected a reading of 55.0.
The flash Markit/HSBC China manufacturing PMI reading fell to 50.5 from November’s final reading of 50.8, representing the slowest pace of growth in three months but still notching a fifth consecutive month of expansion.
While the data shows a slowdown, it still “stands above the average reading for Q3, implying that the recovering trend of the manufacturing sector starting from July still holds up. As a result, we expect China’s GDP growth to stabilize at around 7.8 percent year-on-year in Q4,” Hongbin Qu, HSBC’s chief economist for China said in a comment accompanying the PMI data.
Final PMI survey data for December are due the first week of January.
In Europe, the December PMI reading was the second-highest since mid-2011 and beat the median forecast in a Reuters poll for 51.9. The index has been above the 50 mark that denotes growth for all the second half.
“My sense would be the European numbers are looking a little better and that is consistent with the view that the European economy as a whole is doing somewhat better. But the divergences seem to be widening,” Stanley said.
Markit warned that while the increase in growth was reassuring, the country-by-country breakdown of the data revealed a lopsided recovery, with France floundering and Germany steaming ahead.
“The rebound in the euro zone composite PMI in December makes for encouraging reading and may serve to sooth concerns about the sustainability of the recovery,” said Martin van Vliet, senior economist at ING.
“But we should not get too carried away either - the still-low level of the overall index is a firm reminder that this recovery is still very fragile and sluggish.”
The division between the euro zone’s two biggest economies was marked.
The French composite PMI fell to a seven-month low of 47.0 and signalled a steady contraction in activity, while the same measure in Germany showed a solid expansion to 55.2.
Markit said the data suggested the euro zone economy, which escaped from its longest-ever recession earlier this year, would grow around 0.2 percent this quarter, in line with a Reuters poll published last week.
New orders rose for the fifth month, suggesting the recovery should continue into 2014.
German government bonds pared an early rise on Monday the data.
Markit’s Eurozone Manufacturing PMI rose to 52.7 in December from November’s 51.6. That was its best showing in 31 months and smashed median expectations for 51.9. It was higher than all forecasts in a Reuters poll of 35 economists.
A gauge measuring manufacturing output soared to 54.8 from 53.1, a level not seen in more than 2-1/2 years.
As new orders for manufactured goods grew, factories were able to build up a backlog of work at the fastest pace since April 2011.
Manufacturing growth aside, the PMI for the services sector, which makes up the bulk of the euro zone’s economy dipped to 51.0 from 51.2, confounding expectations for a rise to 51.5.