June 24, 2024

Surveys Show Manufacturing Slowing Worldwide

In the euro area, the purchasing managers’ indexes showed that manufacturing contracted for the first time in almost two years in August, echoing earlier data from South Korea and Taiwan, where new export orders fell sharply.

Britain’s manufacturing sector shrank at its fastest pace in more than two years, hurt by a sharp decline in demand for exports.

The pace of growth in the U.S. manufacturing sector slowed to a crawl but fared better than economists had forecast.

The Institute for Supply Management said its index of national factory activity edged down to 50.6 from 50.9 the month before. The reading topped expectations of 48.5, which would have signaled a contraction, according to a Reuters poll of economists.

And although China’s official P.M.I. rose slightly, its first increase since March, it also showed the effects of slowing demand in Europe and the United States.

A P.M.I. figure for China compiled by HSBC, which relies more heavily on private companies than the large state-owned enterprises that dominate the government’s P.M.I. report, showed that growth in factory activity, while still rapid, was slowing.

“The key thing they show is that we are not out of the woods,” said Jeavon Lolay at Lloyds Banking Group. “The economies are very vulnerable to any shock, which at this moment in time there are a few of. What is happening in the euro zone is very important, and in the U.S., growth has weakened markedly in the last two quarters. There is a risk of a return to recession.”

Markit’s Eurozone Manufacturing P.M.I. fell to 49 in August from 50.4 in July, revised down from a preliminary 49.7. It is the first time since September 2009 that the index for the sector, which drove a large part of the bloc’s recovery, has fallen below the 50 mark that divides growth from contraction.

In a worrying sign for policy makers, the slowdown appears to be spreading. German factories, which have been supporting growth in the bloc, eased off the accelerator, and French manufacturing contracted for the first time since July 2009.

The German economy grew just 0.1 percent in the second quarter, far slower than the 1.3 percent growth seen in the first three months of the year, figures released Thursday showed, adding to evidence that the outlook for its economy, Europe’s largest, was darkening.

New export orders in the euro zone fell for the third straight month. The subindex declined to 46, down from the preliminary 46.9 reading and much lower than the 47.6 in July.

Switzerland, which is outside the 17-nation euro zone, said Thursday that its economy grew at its slowest pace since 2009, as a record-strong Swiss franc hurt exports.

“The West’s deteriorating growth outlook is becoming an increasingly heavy burden to bear,” said Donna Kwok, an economist with HSBC, which sponsors P.M.I. reports in many Asian countries.

Weak growth in the United States and Europe has revived worries that they will slip back into recession, which would deal a heavy blow to Asia’s export-driven economies.

Most advanced economies have already cut interest rates to near zero, and with government finances constrained, policy makers have limited options for spurring stronger growth.

The European Central Bank, the U.S. Federal Reserve and the Bank of England are all expected to retain their ultra-loose monetary policy for at least another year.

That leaves the big emerging economies as the best hope for propping up global growth, but they are also struggling.

While HSBC’s China P.M.I. rose to 49.9 last month, it still pointed to slower growth, and Taiwan’s dropped to 45.2, the lowest reading since January 2009, in the middle of the global financial crisis that crushed world trade.

“Asian growth is set to slow more sharply than most expect over the coming months,” a Credit Suisse economist, Robert Prior-Wandesforde, wrote in a note to clients.

China’s index for new export orders dropped to 48.3 from July’s 50.4, and Beijing attributed the decline at least partly to the debt crises in advanced economies. The National Bureau of Statistics said the export sector was “facing challenges.”

Taiwan had a sharp decrease in new export orders, particularly from Europe, while in South Korea the subindex fell to a seasonally adjusted 48.86 from 52.13, dropping below the neutral point for the first time since October last year.

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Off the Charts: For Home Prices, It’s Back to at Least 2004

What is most impressive about the decline in home prices is the ubiquity of the fall and how many years of gains were wiped out. Real estate agents, using some dubious statistics, used to claim that national home prices had never fallen for an entire year, even if there sometimes were regional markets that suffered for a year or two.

The most-followed index of home prices, the Standard Poor’s/Case-Shiller 20-city composite, managed a small rise in April, the first gain after seven months of declines, but it remained at a level first reached in May 2003.

None of the 20 regions — each “city” is actually a collection of metropolitan areas that include suburbs — have prices now that are as high as they were in 2005, as can be seen in the accompanying graphic. Only four of them, New York, Washington, Seattle and Portland, Ore., have prices as high as they were in 2004.

The return of prices to levels seen many years ago has occurred in areas where prices soared during the boom as well as in regions where there seemed to be no bubble in home prices. From the end of 2001 through the end of 2006, prices in the San Francisco region rose 69 percent, far more than the modest 13 percent increase in the Denver area. But prices in both regions are back to where they were in 2001.

The effects of the decline are all the greater because banks made it easy to withdraw equity from homes when prices were rising, meaning that many more homeowners had mortgages that reflected peak values than would have been the case in earlier housing cycles.

The fact that so many homes are worth less than owners paid for them makes it much harder for those people to move, even if job prospects are better elsewhere, and has contributed to a slowdown in housing sales.

The indexes are based on comparisons of the price received for the same home at different times. During the first four months of this year, S. P. counted 238,408 sales of homes for which it had a previous sale in its database. That was down 14 percent from the same period in 2010, when a temporary tax credit for some home buyers caused a modest recovery in prices that has since evaporated.

Only two of the 20 regions — San Francisco and Washington — now have prices that are up more than 10 percent from the bottom level reached during the downturn. The two other California regions — Los Angeles and San Diego — are the only ones up at least 5 percent from the lows.

It is possible that the indexes now are overstating housing weakness because sales of foreclosed homes, which may be in poor condition and which the sellers may be desperate to unload, make up a larger part of the available data. But there is no indication that the number of distressed sales is likely to decline anytime soon.

Floyd Norris comments on finance and the economy on his blog at nytimes.com/norris.

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U.S. Home Prices Fell Again in February

The Standard Poor’s Case-Shiller Home Price Index for 20 large cities dropped 1.1 percent from January. It was down 3.3 percent over the previous 12 months.

The index is now at 139.27, essentially the same as the low of 139.26 it reached in April 2009.

“There is very little, if any, good news about housing. Prices continue to weaken, while trends in sales and construction are disappointing,” the chairman of the S. P. index committee. David M. Blitzer, said.

Ten of the cities in the index hit a low for the cycle in February, one fewer than January. Detroit was the exception.

Housing prices are falling despite the fact that banks have pulled back on foreclosures, which generally drive neighborhood prices down. They are falling despite low interest rates, which make houses more affordable. And they are falling despite the fact that they have already fallen by a third from their heady peaks in mid-decade.

The Case-Shiller index, which measures repeat sales of houses in 20 large cities, is an imperfect measure of the real estate market. But other indexes also describe a troubled market. The Federal Housing Finance Agency’s index, which is calculated using the purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac, the government loan repositories, is declining at a faster rate than previously.

The F.H.F.A. index fell 1.6 percent in February from the previous month, the agency said last week, while the January decline was revised up to 1 percent. In the last year, the index has fallen nearly 6 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=93fa45218da74a5b472c9e331ba406e6

European stocks broadly lower as banks slump; DAX down 0.65%

European stocks broadly lower as banks slump; DAX down 0.65%
Forex Pros – European stock markets were broadly lower on Tuesday, as shares in the financial sector led losses, while U.S. futures indexes pointed to a higher open on Wall Street.