Manufacturing stabilises as eurozone concerns ease
Global manufacturing has continued to grow for the sixth month running, an international survey conducted across numerous countries has found.
Manufacturing in 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 PMI index was unchanged at 50.6 in June, China, Taiwan, South Korea and Vietnam reported contractions last month.
"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," said Peter Dragicevich, a currency strategist at Commonwealth Bank.
There were more 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 while there were concerns about China's slowing growth, which was reflected in its weaker PMI figures, the country was still expanding at a robust pace.
"China's slowing ... to a more sustainable level," 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 following a further expansion in the US manufacturing sector in June, 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," 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.
In the eurozone, the PMI rose to a 16-month high but still came in below 50, at 48.8, signalling a continued contraction.
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, the monthly survey, published on Monday, found.
The PMI numbers are based on company surveys and considered among the most reliable economic indicators.
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