Factory activity growth slows in Asia, Europe and U.S. in November

By Jonathan Cable, Wayne Cole and Sam Forgione

LONDON/SYDNEY/NEW YORK (Reuters) - Manufacturing growth across Asia, Europe and the Americas eased in November as heavy price cutting failed to revive demand, surveys showed on Monday, providing more evidence that a feeble global economic recovery may be grinding to a halt.

Worryingly for policymakers at the European Central Bank, who are struggling to bolster growth and drive up dangerously low inflation, factory activity declined in the euro zone's three biggest economies: Germany, France and Italy.

"The concern is the ongoing lack of any real growth in the euro zone. We are dealing with very low price pressures, and when that comes with weak growth, like in the euro zone, it raises concerns," TD Securities head of global strategy, Richard Kelly, said.

Data vendor Markit said its final November manufacturing Purchasing Managers' Index (PMI) for the euro zone was 50.1, its lowest reading since June 2013, despite price cutting made possible by tumbling input costs.

That is barely above the 50 mark that separates growth from contraction and, in a sign that there is little prospect of improvement in December, new orders declined for a third month.

The growth slowdown comes despite factories cutting prices at the fastest pace since mid-2013 although neither factor will likely push the ECB into loosening monetary policy further when it meets on Thursday, according to a Reuters poll. [ECB/INT]

Annual euro zone inflation fell to 0.3 percent in November, firmly in the ECB's deflation "danger zone", and as oil prices sank to its lowest in over five years on Monday with the industrial bellwether copper not far behind, there are few reasons to expect any meaningful pick-up.

Both U.S. crude oil and Brent have now fallen for five straight months, the longest losing streak since the 2008 financial crisis and the rout has spread to gold and silver prices while the U.S. dollar rose to seven-year peaks against the yen.

However, British manufacturing activity unexpectedly picked up a little speed as domestic demand offset falling exports from Europe and emerging markets.

ASIAN CLOUDS

Monday's gloomy news began in Asia with China's HSBC/Markit PMI touching a six-month trough of 50.0. The official version was scarcely better, slipping to 50.3 in November from October's 50.8.

"This is the lowest reading since March and highlights downward pressure on China's growth in the manufacturing sector," Credit Agricole economist, Dariusz Kowalczyk, said.

China's troubles were felt broadly across the region, with South Korea reporting exports to Asia's economic powerhouse falling for the first time in three months, while its measure of manufacturing activity stayed stuck in contractionary territory.

In Indonesia, the PMI was at its lowest since the survey began in April 2011, while in Japan, the Markit/JMMA version of the PMI eased. Japan's economy slipped into recession in the third quarter as the impact of a hike in sales taxes lingered longer than anyone expected.

Still, the extent of the contraction may have been overstated, given figures out on Monday showed business investment was stronger than thought.

India was a rare bright spot, as it has been for a few months now, with its PMI climbing to a 21-month high last month.

AMERICAS SLOW ALSO

The U.S. manufacturing sector slowed in November to its lowest rate of growth since January, according to Markit, with the final November PMI falling to 54.8 from October's final reading of 55.9.

"Although still reasonably strong, the pace of growth has slowed for three successive months, taking it down to the slowest since January, when business was hit by extreme weather arising from the polar vortex," said Chris Williamson, chief economist at Markit.

An alternative index from the U.S. Institute of Supply Management (ISM) fell to 58.7 from 59 the month before.

In Canada, the pace of growth in manufacturing held steady in November, matching an 11-month high from October, as exports jumped to their highest level in over a year, according to Markit. The Markit/RBC Canadian Manufacturing Purchasing Managers' index (PMI) was at a seasonally adjusted 55.3 last month.

Brazilian manufacturing activity shrank in November for the seventh time in eight months, with the Markit/HSBC PMI dropping to 48.7 in November from 49.1 in October.

Brazil's economy grew just 0.1 percent in the third quarter from the second, government data showed Friday, while annual inflation currently runs at 6.59 percent, above the central bank's tolerance range.

However in Mexico the Markit/HSBC Mexico Manufacturing PMI Purchasing Managers' Index MXPMIM=ECI rose to 54.3 in November from 53.3 in October, marking its best showing since January 2013.

Globally manufacturing activity expanded at its weakest pace in over a year in November as new orders rose at their slowest rate since July 2013, according to the JPMorgan's Global Manufacturing Purchasing Managers' Index (PMI), produced with Markit, which fell to 51.8 in November from October's 52.2.

That was the lowest reading since September 2013 but it has now come in above the 50 mark that separates growth from contraction for two years.

(Editing by Louise Ireland and Clive McKeeff)