Manufacturing upbeat or down in December

Manufacturing in the United States and China grew in December, suggesting the global economy was on course for moderate growth this year, even as the euro zone looked set to sink deeper into recession.

EUROPE

Germany, Europe's largest economy, saw its crucial manufacturing sector shrink for the 10th straight month and at a faster pace, while French data showed a decline in all but one of the past 17 months.

The slump in Spain deepened and Italy's index, although improved, remained below 50 for the 17th month.

Ireland was the only member of the currency union to show manufacturing growth in December.

"It's pretty grim really," said Jonathan Loynes at Capital Economics. "These surveys are pointing to a pretty deep recession. If the German industrial sector is contracting quite sharply, it is pretty hard to see where growth across the euro zone as a whole is going to come from."

Economists are cautiously optimistic the euro zone economy will start growing at least by the second quarter of this year.

British factory activity jumped unexpectedly to its fastest pace since September 2011, raising the chance that the economy eked out some growth at the end of 2012. <GB/PMIM>

ASIA

Manufacturing activity expanded in Asia as a whole, driven by revival in China's economy, but export demand was uneven, pointing to further sluggish growth for the region.

For Asia, much hinges on the pace and quality of the recovery in China as a new generation of leaders prepares to take charge.

In India, Asia's third-largest economy, the HSBC Markit Manufacturing PMI, which gauges the business activity of the country's factories, but not its utilities, jumped to 54.7 in December from 53.7 in November, its biggest monthly rise since January 2012.

Activity in Southeast Asia's largest economy, Indonesia, expanded but at a slower rate, as growth of new export orders eased from a month earlier.

A lot may depend on elsewhere, however.

"Asia is gradually improving, but the region, including China, remains largely exposed to exports and without signs of improvement in the U.S. and Europe it will be hard for activity to take off," said Frederic Neumann, co-head of Asian economics at HSBC.

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