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Economy in Brief

Global Manufacturing Growth Pauses in August; Output Prices Firming
by Carol Stone September 1, 2004

Growth in global manufacturing activity slowed in August, maintaining a kind of seesaw pattern that has prevailed all year long. The global Purchasing Managers' Index was 55.8, easing from 57.2 in July. The Euro-Zone's index was 53.9, down from 54.7, and that in Japan was 54.9, off from 55.5. Several countries in Europe showed similarly modest back-steps, most less than a percentage point. Indexes in Greece and Spain eked out small advances.

New orders and output were responsible for the restraint, as they generally reversed pick-ups that had occurred in July. Employment behavior was uneven, as it held nearly steady in the Euro-Zone, the UK and Japan, but slowed more noticeably in the US.

Prices continue to hold attention. Input prices are technically down in this survey, falling to 66.6 in the Euro-Zone in August from 70.2 in July. But these are, of course, very high levels, which show that most companies are experiencing rising materials costs, presumably mainly oil-related. In Europe, this is exerting upward pressure on output prices, which gained a bit in August to their highest index level in the brief, 21-month history of this component. In Japan, likewise, output prices, "charges", reached 50.5 in August, their first reading above 50 in the 3-year span of this survey item.

The international PMI surveys are conducted locally, and coordinated by NTC Research, a London firm; release is made through Reuters. Data for non-US countries are contained in Haver's PMI database, with some items in INTSRVYS, our new international survey compilation.

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