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Manufacture still growing worldwide

Global manufacturing has continued to grow for the sixth month running, an international survey of numerous countries has found.

Global manufacturing has continued to grow for the sixth month running, an international survey of numerous countries has found.

The manufacturing sectors of the US, Japan, Britain, Russia, Switzerland and Mexico recorded "solid rates of expansion", while the downturn in eurozone countries continued to ease, the global Purchasing Managers' Index from JPMorgan and Markit Economics found.

While the global index remained unchanged at 50.6 last month, China, Taiwan, South Korea and Vietnam reported contractions.

"It's a slow grind, but we are heading in the right direction," said Peter Dragicevich, a currency strategist at Commonwealth Bank.

"Overall, the outlook for the global economy is somewhat similar to last year, except that a lot of the tail risks that we were worried about - the concerns about the eurozone breakdown and the fiscal cliff - have eased," Mr Dragicevich said.

There were increases in output and new orders, while new export business declined for the first time in four months, led by the US and China.

Jobs were also shed for the first time in seven months.

Mr Dragicevich said that while there were concerns about China's slowing growth, which was reflected in its slightly weaker figures in the index, the world's second-largest economy was still expanding at a robust pace.

"China's slowing from the unsustainable rates that it was growing at over the last few years to more a sustainable level, which is actually a good thing for Australia over the long term," he said.

"The medium-term outlook for China is still quite positive. There is a lot of urbanisation left to occur and that's a big level of support for commodity demand for Australia."

The US stockmarket rose on the back of US manufacturing growth last month although the rate of growth was at its slowest in eight months.

"Manufacturing clearly down-shifted a gear between the first and second quarters, and is at risk of losing further momentum as we head into the second half of the year," Markit chief economist Chris Williamson said of a separate US-focused survey.

Mr Williamson said the continued weak order-book growth was pointing to risks of stalling in the sector.

"Firms are responding to the increasingly worrying order-book trend by pulling back on recruitment," he said.

"We will need to see a shift turnaround in this employment trend if the [US Federal Reserve's] projection of a drop in the unemployment rate to 7 per cent by the end of the year is to be achieved."

In the eurozone, the PMI rose to a 16-month high but still came in below 50, at 48.8, signalling a continued contraction.

Mr Williamson said the sector showed signs of stabilising. "Both output and new orders barely fell during June, and on this trajectory a return to growth for the sector is on the cards for the third quarter," he said.

The Australian Performance of Manufacturing Index rose 5.8 points in June to 49.6, just below the 50 mark, which signals an expansion in activity. But exports continued to struggle despite the falling dollar, the monthly survey, published on Monday, found.

The index is based on company surveys and considered one of the most reliable forward economic indicators.

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