Global economy still fragile

London (Jan 4) The global economy ended 2014 in a fragile state as factories struggled to maintain growth across  Europe  and  Asia  , business surveys showed, adding to pressure on central banks to implement more stimulus.

Ebbing price pressures across the continents offers room for the People's Bank of  China  and the  European Central Bank  to do more to drive up inflation and support growth. "Growth really does appear to be stalling based on these indicators so certainly the pressure is on," said  James Knightley  , senior global economist at  ING  . Eurozone manufacturing concluded last year on a subdued note as output, new orders and employment all recorded sluggish growth.

Markit's  final December manufacturing Purchasing Managers' Index stood at 50.6, down from an earlier flash reading of 50.8 but beating November's 17-month low of 50.1.

That is above the 50 mark that separates growth from contraction, but there was little sign of any improvement this month, with the subindex for new orders at just 50.2, leading factories to barely increase headcount in December.

British manufacturing expanded at a much weaker pace than expected in December, suggesting its contribution to the economic recovery ebbed further in the final months of 2014.

The Markit Economics final index of US manufacturing decreased to an 11-month low of 53.9 in December from 54.8 a month earlier, the  London  -based group.

China's  massive factory sector looked to have sputtered in December and across the region manufacturers struggled with weak demand, both at home and abroad.  China's  official PMI slipped to 50.1 in December from November's 50.3, its lowest level of the year. While the PMI for  China's  services sector, which accounts for close to half of the economy, edged up to 54.1 from November's 53.9.

Indian manufacturing activity expanded at its fastest pace in two years in December as new orders flooded in and factories kept price increases to a minimum, a business survey showed on Friday.

The HSBC Manufacturing PMI, compiled by  Markit  , rose to 54.5 in December from 53.3, its highest since end-2012 and its 14th straight month above the 50-mark that separates growth from contraction.

In November,  India's  annual consumer price inflation fell to 4.38 per cent, well below the eight per cent which the RBI had hoped to achieve by the end of the year and the lowest since the government started releasing the data in 2012.
In  South Korea  , consumer prices grew at the slowest clip in more than 15 years in December, opening the door for further rate cuts there.

Source: KhaleeTimes