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Economy in Brief

Global Manufacturing Performance Improves in July
by Carol Stone August 2, 2004

Manufacturing activity picked up in July after June's slight moderation in growth. The NTC Research global purchasing managers' index rose to 57.3 from 56.6 in June. More widespread gains in output and new orders were generally responsible. Importantly, in most regions, employment looked better. In the Euro-Zone, that index reached 49.7, nearly back to the 50% breakeven point and the best level since early 2001. In Japan, this component eased, but remained high enough that the last three months are the best such span in this not-quite-three-year-old survey. The global employment gauge edged down from 53.2 to 52.7, held back by a decrease in the US ISM employment index, even though the latter stands at a very high level.

Among various countries, the PMI increased most in Denmark, Ireland, Japan, the Netherlands and the UK. It rose modestly in Italy and Germany. In all these, the index is well above 50%, indicating broad growth. In Eastern and Central Europe, there were declines in July, particularly for Russia, the Czech Republic and Poland. French and Greek manufacturers also saw somewhat reduced expansion.

These PMI results are generally mirrored in the widely watched German Ifo Business Climate survey. This index gained 1 point in July in both manufacturing and in the overall business measure, with manufacturing more than offsetting a dip in June and the all-sector index regaining much of its decrease then. These gauges also show considerable improvement from the post-2000 decline in German business prospects, although some sluggishness is still evident.

%, >50 = Expansion, 
    <50 = Contraction
July 2004 June 2004
Global Overall Index 57.3 56.6
Japan Overall Index 55.5 54.3
Euro-Zone Overall Index 54.6 54.4
Russia Overall Index 53.2 54.2
Australia Overall Index 53.5 50.6
US ISM Index 62.0 61.1
Germany Ifo Survey (2000=100):  Manufacturing 97.2 96.2
  All Sectors 95.6 94.6
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