Friday, September 21, 2012

Global Manufacturing Slump Challenges Central Banks

Factory activity data out Thursday showed the world's top economies remain in a slump, highlighting the tall order central banks face as potential engines of growth.
The initial reading on Markit's U.S. manufacturing gauge indicated the sector had its weakest quarter in three years, with Q3 GDP growth shaping up to be slower than Q2's 1.7% pace.
A private-sector measure of Chinese manufacturing edged up, but activity has been contracting every month for nearly a year. Output hit a 10-month low.
The eurozone's manufacturing contraction eased somewhat. But weak orders and inventories provided little hope of a near-term rebound. And services activity shrank at a faster rate.
Japan's exports fell annually for the third month in a row in August, and manufacturing sentiment worsened.
The grim data come after the European Central Bank, Federal Reserve and Bank of Japan this month acted to prop up their economies. But the reports also point to the limits of what policymakers can do.
While the ECB's plan to buy unlimited amounts of sovereign debt has alleviated some concerns over the debt crisis, the eurozone still has no long-term solution, said Virendra Singh, an economist at Moody's Analytics.
"The focus is on Europe," he said. "Most companies are not investing because of the sheer amount of uncertainty."

Read more: http://news.investors.com/economy/092012-626483-global-factory-skid-weighs-on-central-banks.htm?src=HPLNews

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