Factories fuel fears over global growth

The outlook for the global economy has darkened amid mounting worries about the US, China and europe.

A flurry of surveys into manufacturing around the world painted a bleak picture as the downturn deepened in China and growth remained sluggish in the West – particularly in France.

The reports will cause alarm in Britain given how dependent the UK is on europe, the US and China for trade and investment.

‘There is substantial concern at present that global demand weakness is dampening the economy in the industrialised countries,’ said Jorg Kramer, chief economist at Commerzbank.

Markit’s purchasing managers’ index (PMI) for Chinese factories – where 50 is the cut-off between growth and decline – fell from 47.3 in August to 47 this month. That was the worst reading since March 2009 during the depths of the Great Recession and the seventh month of contraction in a row.

The report underlined the malaise in the world’s second largest economy and fuelled fears that a ‘hard landing’ in China could trigger another global slump.

America, the world’s largest economy, did little to lift the mood – its factories clocked up a score of just 53 – unchanged from August’s 22-month low. Chris Williamson, chief economist at Markit, said that with US factories ‘stuck in crawler gear’ the Federal Reserve could now ‘hold off with interest rate hikes until next year’.

europe offered little respite from the gloom with the PMI for manufacturers in the single currency bloc dipping from 52.3 to 52.

Williamson welcomed ‘a steady expansion of the eurozone economy’, but added: ‘There remains a worrying failure of growth to accelerate to a pace sufficient to generate strong job creation.’