Manufacturing activity deteriorated across much of Asia in November, while European factories struggled to gather momentum. The data comes as markets brace for an expected imminent rise in U.S. interest rates that could jolt the global economy. David Pollard reports.
Euro zone factories grew at their fastest in 19 months in November. They cut prices for a third month - that helped boost domestic demand. A weaker euro made exports look more attractive. Manufacturing's still around 10% smaller than before its pre-crisis peak. But November's PMI reading (52.8) isn't so bad - says Seven Investment Management's Justin Urquhart-Stewart. SOUNDBITE (English) SEVEN INVESTMENT MANAGEMENT, HEAD OF CORPORATE DEVELOPMENT, JUSTIN URQUHART STEWART, SAYING: "Spain was actually looking pretty positive, no one looking negative, even the French were flat and flat for them is pretty good at the moment. So that is encouraging." Another view is that euro zone manufacturing is still weak - and less encouraging still is Asia. Factories there report weaker activity - China sinking to a three-year low. (49.6 v 49.8) New export orders dropping for a 14th month. And a possible Fed rate hike this month adding the prospect of another jolt to the economy. Japan, though, bucked the trend - manufacturing there expanded at its fastest in 20 months. (52.6 v 52.4) Firms now catching the eye of investors, says Stewart. SOUNDBITE (English) SEVEN INVESTMENT MANAGEMENT, HEAD OF CORPORATE DEVELOPMENT, JUSTIN URQUHART STEWART, SAYING: "They've started paying dividends, bit of an old fashioned concept which never really took off in Japan. So therefore that's why a lot of those companies are now looking more appealing. Look at the economy itself, it still looks as though it's stuck in the mud." China's slashed interest rates six times in the past year to revive growth. And in Europe, the ECB 's expected to add more stimulus this Thursday. Though an improving picture might encourage it to hesitate. A dilemma - and perhaps not such a bad one for a change.