Manufacturers increased production and employment in February, signaling factories are leading the nation out of recession as the new year begins. The Institute for Supply Management’s factory index fell to 56.5 from January’s 58.4, which was a five-year high, figures from the Tempe, Arizona-based group showed. The measure exceeded 50, signaling expansion, for a seventh straight month. The group’s jobs gauge rose to the highest level since January 2005. Combined with a report showing consumer spending in January climbed more than anticipated, the figures signaled the expansion that began late last year will be sustained into 2010. The need to rebuild inventories and invest in new equipment may keep factories hiring, prompting the rebound in employment to ripple through the rest of the world’s largest economy. Experts say that it’s a business-led recovery and manufacturing is going to be a part of it in a noticeable way.
European manufacturing accelerated to the fastest pace in more than two years in February as reviving global demand boosted export orders. A manufacturing index for the 16-member euro region increased to 54.2 from 52.4 in January, London-based Markit Economics said last week. That’s above an initial estimate of 54.1 published on Feb. 19 and the highest since August 2007. Manufacturing accounts for about a quarter of the economy and a reading above 50 indicates expansion. European companies are stepping up output to meet reviving global orders after governments spent trillions of dollars to encourage demand. In the U.K., the euro area’s biggest trading partner, manufacturing grew for a fifth month in February and a report later today may show that activity at U.S. factories also rose last month. Economists assume that global demand is increasing and the euro region is benefiting as a result. The common impression is that manufacturing will continue to show positive developments over the coming months while domestic demand will remain subdued.
Russian manufacturing expanded for a second month in February, signalling a ‘fragile’ recovery, as new orders continued to grow, while employers shed more jobs. VTB Capital’s Purchasing Managers’ Index slipped to 50.2 last month from 50.8 percent in January, the bank said in an e- mailed statement last week. The index, which is based on a survey of 300 purchasing executives, shows a contraction with a figure below 50 and growth with a figure above 50. ‘A marginal expansion in activity across the sector for the second month in a row’ was driven by new orders and higher output, Dmitry Fedotkin, an economist at VTB Capital in Moscow, said in the report. “The employment situation deteriorated further as respondents claimed improvements in business activity were too weak to justify new hiring.” Industrial output and retail sales boosted gross domestic product, which expanded a seasonally adjusted 0.3 percent in January from the previous month.
Ukraine came under European Union pressure to make budget cuts needed to release an International Monetary Fund loan as the struggle between President Viktor Yanukovych and his opponents over tax and spending intensified. On his first foreign trip since taking office last week, Yanukovych was told by European Commission President Jose Barroso that an accord over the stalled $16.4 billion IMF loan would also unlock 500 million euros ($680 million) in EU aid.
Written using materials from Bloomberg and Reuters Research