Australia and the US were the two surprise improvers in the regular monthly release of surveys of manufacturing activity in the world’s major economies Friday and Friday night, our time.
The gains went against market forecasts, although the US rise was tempered by a fall in another measure of consumer confidence, which remains one of the major hurdles for the American economy to overcome.
China’s monthly surveys were predictably weak (as the flash report a week earlier had suggested).
Indian and South Korean reports were also weak, not good news for Australian resource exporters if this continues into the second half of this year.
And the quarterly Tankan survey of sentiment among medium and big Japanese companies was also predictably weak, while inflation is again rising, and unemployment outside the stricken earthquake and tsunami zones on the northeast coast, also fell.
In the US the Institute for Supply Management’s manufacturing index rose to 55.3% in June, higher than the 53.5% registered in May and well above the 52.3% predicted in market forecasts.
The Thomson Reuters/University of Michigan survey of consumer sentiment fell to 71.5 at the end of June from 74.3 in May, mirroring a gloomy survey of sentiment from the US Conference board earlier in the week.
But the Australian report was as big a surprise as the one later Friday night from the US.
After hearing from every quarter how tough times were in manufacturing, the sector expanded at its fastest pace in almost a year in June thanks to strength in two key sectors, while new orders perked up noticeably.
The Australian Industry Group/PriceWaterhouseCoopers performance of manufacturing index (PMI) leapt 5.2 points to 52.9, the highest since July last year and back above the 50 level that marks the threshold between contraction and expansion.
The index for production climbed 7.8 points to 54.7, while that for new orders rose 6 points to 54.6. The survey’s measure of employment also improved by 3 points to 49.4.
"The positive result, particularly the lift in new orders, is good news for a sector that has been weak for some 12 months," AiG chief executive Heather Ridout said in an accompanying statement.
The rise in output was led by the construction materials and basic metals sub-sectors.
The index of input costs dipped 2.2 points in June but remained high overall at 68.5, while the measure of wages rose 2.6 points to 61.9.
The performance in the US and Australia contrasted with reports from other economies.
China’s factory index fell to the lowest level since February 2009, while the 17-nation eurozone saw its index slide to an 18-month low.
In China it wasn’t happy 90th birthday to the ruling Communist party from the country’s manufacturing sector on Friday.
The sector saw its weakest expansion in two years in June while the news from India and South Korea was also poor.
China’s official purchasing managers’ index – a key measure of the manufacturing sector – dropped to 50.9 in June, down from 52 a month earlier.
It was the lowest reading since February 2009 during the global financial crisis and tottered close to dipping below the 50 line that would signal a contraction in industrial activity.
And the rival survey published by HSBC and UK group Markit showed headline activity at 50.1, easing from 51.6 in May.
That was unchanged from the flash reading on June 23.
HSBC said the results signalled manufacturing production on the decline for the first time since July 2010, thought it said the rate was “marginal”.
HSBC said its PMI, when averaged for the quarter, was now showing the weakest reading since the April-June period of 2009.
Output and new orders in the Chinese official manufacturing survey all showed a sharp fall, but the good news was another fall in input prices, indicating that inflationary pressure from global commodity costs continues to ease.
In South Korea the country’s huge manufacturing sector again eased in June with the HSBC Markit PMI falling to 51.1 in June, a six-month low.
Export growth also slowed to 14.5 % in June from a year ago, the lowest level since October 2009. June consumer prices jumped 4.4% from June 2010, still above the official target of 4%.
In India the HSBC Markit survey showed a fall to 55.3 in June from 57.5 in May. That was after a recent rate rise as the central bank and government struggle to control inflation.
In Europe German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted, not good news for the bailoutees in that group.
The slowing in German activity was also something of a surprise to economists who had been looking for a more robust report.
UK manufacturing was also weak as well, giving the very strong hint that Europe as a whole is slowing.
German retail sales in May were also very weak, according to a report on Thursday.
And finally the fall in Japanese business sentiment was not unexpected.
The fallout from the March 11 quakes, tsunami and the subsequent Fukushima nuclear power station crisis pushed sentiment among major manufacturers into the red for the first time in more than a year in the three months to June.
Large manufacturer sentiment in June fell from 6.0 to minus-9.0 in March, a drop of 15 points and the first negative reading in five quarters.
(The figure represents the percentage of companies saying business conditions are good minus those saying conditio
