US manufacturing ended its worst quarter in three years in September as foreign demand for US goods fell sharply, an industry survey showed on Monday.
The final Markit US Manufacturing Purchasing Managers Index (PMI) fell to 51.1 in September from 51.5 in August, and averaged 51.4 in the third quarter. Both the monthly and quarterly readings were the lowest in three years.
A reading above 50 indicates expansion. The index?s reading for the manufacturing sector?s output fell to 50.6 from 51.9, also a three year low, while employment slipped to 51.9, the lowest reading since 51.1 in December of 2010. Indicators suggest manfacturing production and employment could be on the verge of contracting, meaning that the sector is now likely to be acting as a drag on the wider economy, said Chris Williamson, Markit chief economist.
The US economy grew at a 1.3 percent pace between April and June, but Williamson said manufacturing weakness could contribute to an even slower rate in the third quarter. As indicated in Markit?s preliminary reading last month, manufacturers were hurt by weaker demand overseas, with new orders for exports slipping at their fastest rate in 11 months.
Euro zone: Back to ?08
Euro zone manufacturing put in its worst performance in the three months to September since the depths of the Great Recession, with factories hit by falling demand despite cutting prices, a business survey showed on Monday ? pointing to a new recession.
Factories helped lift the 17-nation bloc out of its last recession but the survey suggests a downturn that began in smaller periphery countries has taken root in core members Germany and France.
Despite seeing some easing in the rate of decline last month, manufacturers across the euro area suffered the worst quarter for three years in the three months to September, said Chris Williamson, chief economist at data collator Markit.
The sector will act as a severe drag on economic growth. It therefore seems inevitable that the region will have fallen back into a new recession in the third quarter.
Markit?s Eurozone Manufacturing PMI rose to 46.1 in September from 45.1 in August and above the preliminary reading of 46.0. But that was its 14th month below the 50 mark that divides growth from contraction. The output index rose to 45.9 from August?s 44.4 but chalked up its seventh month of decline.
China: Slowing times
China?s economy offered more evidence of a seventh straight quarter of slowing growth on Monday, with an official survey of factory managers remaining in contractionary territory for a second successive month despite improving from August?s low.
China?s official factory purchasing managers? index rose to 49.8 in September from 49.2 in August, the National Bureau of Statistics said on Monday. August had marked the lowest reading since November 2011, as the world?s second-biggest economy struggles against cooling exports, factory output and fixed asset investment.
The data continues to reinforce the hard landing that we have predicted for China, because this is the second consecutive month of a sub-50 reading, said Prakash Sakpal of ING in Singapore, which forecasts Chinese economic growth will be close to 7% in both the third and fourth quarters of this year.
UK: Worse than feared
Activity in the British manufacturing sector shrank more than expected in September as export orders fell and costs soared, a survey showed, raising the risk that the economy will falter after rebounding in the past few months.
The CIPS/Markit Purchasing Managers? Index (PMI) for the manufacturing sector fell to 48.4 from an upwardly revised 49.6 in August, dipping further below the 50 mark which separates growth from contraction.
The latest signs of renewed weakness in manufacturing will support the view that the recovery is fragile and that the Bank of England will extend its quantitative easing asset purchases once the current round is completed in November.
