Asian tigers on way to recovery

ASIA’S largest economies showed hints of healing last month, but euro zone factory growth remained tepid as Greek debt talks, and the country’s possible departure from the bloc, dominated debate in Europe.

Markit’s final euro zone manufacturing Purchasing Managers’ index (PMI) reached a 14-month high, but only nudged up 52.5 points last month, from May’s 52.2. That was in line with a preliminary reading published before the Greek fears intensified.

Any reading above 50 indicates growth. A sub index measuring factory output that feeds into the composite PMI, due on Friday and seen as a good guide to growth, came in at 53.6, just above May’s 53.3.

That PMI outstripped lacklustre readings from Germany and France, the euro zone’s two biggest economies, for a second month.

“It is still only consistent with fairly sluggish growth in euro zone industrial output, suggesting the beneficial effects of the euro’s depreciation may already be starting to fade,” said Jessica Hinds, an European economists at Capital Economics.

“The country breakdown revealed that industry is still faring well in Spain and Italy, but with worries about Greece intensifying this may not be sustained.”

British manufacturing growth slowed unexpectedly to its weakest rate in more than two years, dented by subdued export demand from Europe.

Later yesterday in the US, the Institute for Supply Management (ISM) factory PMI was expected to accelerate, reinforcing views the Federal Reserve could start raising interest rates in September.

Growth in China’s services sector picked up in June while big Japanese companies planned to ramp up spending at the fastest pace in a decade, offering hope that prospects are improving for Asia’s largest economies, despite sluggish factory growth.

Activity in China’s factory sector expanded slightly in June, though not as much as expected, official surveys showed, suggesting the economy may be starting to slowly level out after a raft of support measures.