Global growth outside the U.S. appeared lost momentum in August, according to business surveys of some of the world’s largest economies published Thursday.
The Purchasing Managers Indices for China and the Eurozone both fell, although both remained at levels consistent with economic growth, preliminary estimates showed.
The decline in the Chinese manufacturing PMI, to 50.3 in August from 51.7 in July, was bigger than expected, raising fears that the boost to the economy from government stimulus measures earlier in the year may already have run its course. An index reading above 50 generally signifies growth.
“We think more policy support is needed to help consolidate the recovery,” said Hongbin Qu, chief economist for China at HSBC, said in a statement accompanying the release.
Stocks in both Shanghai and Hong Kong fell on the news, with the benchmark indexes down 0.4% and 0.7% respectively by the close.
In the Eurozone, a composite index blending both manufacturing and services output fell to 52.8 from 53.8 in July, with the manufacturing index falling more sharply than the services one. Both remained above 50, somewhat at odds with data released last week showing that the Eurozone economy failed to grow at all in the second quarter and started the summer in weak fashion.
Although the indices are generally seen as a reliable indicator of economic developments more or less in real time, they have failed to pick up the sharp slowdown in the Eurozone as the conflict in Ukraine has taken its toll on trade with Russia and, to a lesser extent, other eastern European countries.
Markit noted that its French index had stabilized at 50 after three straight declines, albeit the manufacturing index fell to a 15-month low of 46.5 and companies shed jobs at the fastest rate in six months. The French CAC-40 benchmark stock index was up 0.6% by mid-morning in response, while Germany’s DAX index was up 0.4%.
There was also a positive surprise in Japan, where the manufacturing PMI rose to 52.4 from 50.4 in July, driving the Nikkei index up by 0.9%. Payrolls grew at the fastest rate in three months and there was a sharp rise both in output and new orders, according to index publisher Markit.
Japan’s recent economic data have been badly distorted by a hike in value-added tax that many feared could stop the recovery in its tracks. However, Markit economist Amy Brownbill said “It would seem that the Japanese economy is recovering from the rise in the sales tax and showing more resilience than 17 years ago when a similar tax hike was implemented.”