Manufacturing surge fuels recovery hopes
- Source: Global Times
- [04:38 January 06 2010]
- Comments
With the US manufacturing sector growing at its fastest pace in more than three years for the fifth consecutive month in December, and strong performance in Asian and European manufacturing sectors, the global economic recovery from the worst recession in decades appears on track for 2010.
According to a report released Monday by the US Institute for Supply Management, economic activity in the manufacturing sector accelerated in December as the index increased from November's reading of 53.6 percent to 55.9 percent last month, the fastest growth since April 2006, demonstrating a generally expanding manufacturing economy.
The production and employment indices of the world's largest economy also climbed 1.9 percent and 1.2 percent respectively, injecting momentum into the overall recovery process.
"Manufacturing will continue to be an area that provides support to the US economy," said Kevin Flanagan, fixed-income strategist at Morgan Stanley.
On top of strong US recovery, Chinese factory activity also expanded in December at the fastest pace in the HSBC index's five-and-half-year history, together with India's manufacturing sector, which grew at a faster clip, according to Markit Economics.
The eurozone's manufacturing gauge hit a 27-month high, Investor's Business Daily reported Monday.
But despite the positive panorama, some economists adopt a conservative viewpoint.
In a separate report, the US Commerce Department reported a slacking construction market, whose spending fell 0.6 percent in November. The decline to $900 billion, the lowest level since July 2003, was the seventh straight month of weakness in the industry.
"These issues suggest that while 2010 will be a recovery year for the US factory sector, it will likely be muted and insufficient to soak up historic excess capacity," said Cliff Waldman, an economist for the Manufacturers Alliance/MAPI.
However, global stock market gains eclipsed the downbeat construction data, displaying a buoyant performance.
In Europe, stocks fizzed upward Tuesday, extending a New Year rally, with London striking a 16-month peak, helped by news on the Cadbury takeover saga, dealers said.
In Paris, the CAC 40 gained 0.04 percent to 4,015.29 points, while Frankfurt's DAX 30 added just 0.01 percent to 6,048.69 points.
Tokyo shares closed up 0.25 percent at 10,681.83, while Hong Kong was 2.02 percent higher and Singapore up 0.73 percent in afternoon trade.
Agencies
