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China, France drag on global manufacturing revival

Growth in China's service sector slows to 5-year low

Reuters London/Beijing
Manufacturers around the world enjoyed a solid start to the year as order books swelled, surveys showed on Monday, though a struggle for growth in China and a downturn in France took the shine off the overall picture.

Euro zone factories had their best month since mid-2011 and, with unemployment near record highs, increased headcount for the first time in two years. They were led by a sharp pick-up in Germany and a revival among the states on the region's periphery.

But France, the bloc's second biggest economy, remained a drag on the region.

"The major area of uncertainty over the last few years has been the euro area, but the latest PMI numbers tend to confirm (it)... is on a gentle recovery path with the periphery gaining encouraging momentum as well," said Philip Shaw at Investec.
 

"The latest numbers on China, and the UK, are a little less positive but there is nothing that would signal any major concerns about those economies from today's surveys."

Growth in China's service sector growth slowed to a five-year low, putting the focus on concerns of an slowdown in Asia's economic powerhouse - a factor behind the selloff that has hit emerging markets in the past two weeks.

The rate of expansion in activity in US factories probably also slowed last month, figures due later are expected to show, echoing earlier data from Britain that suggested a swift upturn in factory activity there eased slightly.

Markit's final Eurozone Manufacturing Purchasing Managers' Index (PMI) rose to 54.0 last month, pipping an earlier flash reading of 53.9 and comfortably ahead of December's 52.7. The last time it was higher was in May 2011. A reading above 50 indicates growth.

The sub-index measuring output, which feeds into a composite PMI due on Wednesday and seen as a good guide to broader economic growth, rose to 56.7 from December's 54.9, in line with a flash estimate and its highest since April 2011.

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First Published: Feb 04 2014 | 12:04 AM IST

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